Are you Ready to Invest? – Keep your Emotions in Check

According to the Bank of Montreal, two thirds of Canadian investors have trouble keeping their emotions in control when it comes time to invest. Remember, when it comes to investing, letting your emotions overwhelm you can come back to bite you. First time investors are usually afraid to take the plunge. If you happen to be one of them, it’s best that you keep the following in mind before committing to anything –

Afraid of Losing it all? Diversify

The old adage “Don’t put all your eggs in one basket” rings true here. For example, if you are hesitant about investing in mutual stocks, go for index funds. The more diverse your portfolio is the better off your investments will be.

Conquer your Fear of Investing

Fear has the tendency to make the most seasoned investors doubt themselves. You might end up panicking and selling because everyone else is. Analyzing your investment will make it less of a mystery. Take a step back and analyze your motives. Does selling your investment seem like a good idea? Maybe you should consider other options to solve your particular issue. It’s best that you reconsider if the only reason why you are afraid to sell is because things seem tough.

Smart Investment Choices go a long Way

Always invest with a purpose in mind. This will give you the chance to prepare for any financial responsibilities that you need to take care of down the road especially if you have dependants or mouths to feed. Remember, your investment choices should reflect your goals. For example, certificates of deposits can serve as low risk investments if you need to save up for retirement or need to put in a down payment for a house.

Make a Plan

You won’t be afraid to invest once you make an investment plan and stick to it. Think hard about what you want your portfolio to look like and what you want it to accomplish.

Will it help you reach your goals? If not, don’t hesitate to tweak it. You can start by analyzing what it is that makes your investments work. Once your plan is in action, it will help you understand your situation better and stay on track. Keep your emotions in check, know what your priorities are and your fear will take a back seat.

Take the First Step

Of course, you will never overcome your fear to invest if you do not take the first step. Your first step doesn’t have to be an investment either. You can start by learning how the financial market works.  Once you know what you are getting into, it will be easier for you to make a decision.

You can overcome your fear to invest if you change how you think about the prospect. It doesn’t matter whether you invest in stocks in the Canadian Stock Exchange, real estate or anything else. The process is all about putting your money to work and deciding on risks that won’t deplete your finances.

What Growth Investors Can Learn From Vultures

Just as when Police Detectives cite the reason they prefer to work homicide cases as being because the dead do not shoot at them, growth investors can learn that using the vulture method of buying value at a discount, is much safer than jumping on a wave of earnings that is exposed to countless risks. The core lesson being that long term growth can change overnight, whereas buying at a discount to true value can never fail.

Of course this flies in the face of what many feel is the right thing to do by betting on winners, when the vulture will tell you that the field is littered with previous winners that fell prey to some aspect of the market, management, poor controls, or any other number of unmitigated risks. Most investors do not want to think of themselves as capitalizing on the misfortune of others, yet growth investors should look to the spoils of the vulture and realize that winners do not always win and few keep winning for long periods of time.

Second to understanding the true risk in overpaying for future hopes in the form of earnings, the growth investor can benefit from the vulture’s ability to identify the true value and underlying profit potential for each aspect of a business. This understanding of underlying value, earnings production capacity, and potential of portions of a business if unleashed from the whole, can give the growth investor insight into management’s maximization and allocation of resources as well as their understanding of their business as a whole. Any growth company that is under utilizing parts of the company could signify a management team that is a one trick pony and will not be able to adapt to changes in market conditions, thus preserving shareholder value.

Lastly, growth investors can learn to hold management accountable to maximizing underlying value should the company began to falter. Why growth investors sell to vultures when they themselves could realize at least some portion of remaining value is a mystery for the ages, after all, they hold ownership. In most cases, the growth investor could mitigate losses through maximizing liquidation and potentially salvaging portions of companies, leveraging equity into new companies that themselves could become a growth investment opportunity.

Growth investors and vulture’s alike are both necessary for an efficient market. Someone needs to build and take risk while there must be others that come in to clean up any mess or failures left behind. Both serve their function and both are honourable endeavours. The growth investor needs to realize this and use the tools of the vulture to make certain that they choose the growth companies that are truly maximized, have underlying assets and value that can safeguard losses and if all else fails, deny the vulture the opportunity to reap massive rewards by pushing the limits of available options should problems arise. Vultures spend all of their time waiting for the situation to go beyond hope, the growth investor should consider not selling out and fighting until the very end.

Canadian Investment Portfolio’s Remodeled with the Expertise of Justin Bender and Moneysense

Moneysense‘s Dan Bortolotti enlisted the financial expertise of portfolio manager Justin Bender and investment advisor Shannon Dalziel, from PWL Capital, Inc. of Toronto to renovate the investment portfolios of Canadians in need of change. The results were amazing and found their way to the Yahoo finance Canada: Renovate your Portfolio. The article details the successful portfolio makeovers of three Canadian households: a retired couple, a family with three young kids, and a single woman.

“Each of our investors was struck by how much they would save in fees?” on a mid-six-figure portfolio, a 2% savings can be $1,000 a month “but it’s not just about cost. After all, if you’re doing a renovation, you might be able to buy a top-quality power drill at a deep discount, but that won’t help you drive a nail. In the same way, we hope to show you that building a portfolio is all about finding the right tool for the job.” says Dan Bortolotti in the article.

Justin Bender has a unique way of presenting risk assessments to his clients called Monte Carlo simulations, which are a form of stochastic modeling techniques, where he stress tests different asset allocations to demonstrate which will work best for the clients situation. This combination of his financial genius and his ability to show investors concepts that they can understand and trust has shown amazing results.