Personal Finance Quotes

Investing 100% of your savings in paying down a mortgage can be a winning strategy, especially for those who do not want any stock market risk. Applying all long-term savings to mortgage paydown means giving up the potential that stock market returns will exceed your mortgage 'investment' returns (your mortgage rate) over time. Given that mortgage rates are so low, it won't take much for the stock market to outperform. So, some combination of mortgage repayment and tax-sheltered stock investments (in TFSA and/or RRSP) probably makes sense for most Canadians. [2018] - Larry Bates

As long as you switch from one tax-sheltered account of the same type (as in RRSP to RRSP, and TFSA to TFSA) there will be no tax consequences. You just carry on. If you switch out of a regular, non-sheltered account and sell assets (like mutual funds) to reinvest in new assets (like index ETFs) there may be tax consequences. [2018] - Larry Bates

Place your orders to buy or sell stocks and ETFs during regular open hours of the exchange on which they trade. Both Toronto Stock Exchange and major US exchanges (such as New York Stock Exchange) are typically open from 9:30am to 4:30pm Eastern Time. [2018] - Larry Bates

Steer clear of preferred shares and mortgage investments. [2018] - Larry Bates

According to the Spectrum Group, only 10% of households in the United States or Canada with wealth of at least $1 million allow advisors to call the shots and make the move whereas 30% don't use any advisors at all. The remaining 60% may or may not consult an advisor on an as-needed basis and then make their own moves. Recent wealth surveys show that affluent investors achieved and built on their wealth with ownership investments, such as their own small businesses, real estate, and stocks. [2018] - Tony Martin

For people to be considered wealthy, they should meet the following two criteria: 1. They should have enough money to never have to work again, if that's their choice. 2. They should have investments, a pension, or a trust fund that can provide them with twice the level of their country's median household income over a lifetime. [2017] - Andrew Hallam

The 4 Percent Rule: If John builds an investment portfolio of $2.5 million, then he could feasibly sell 4 percent of that portfolio each year, equating to roughly $100,000 annually, and never run out of money. If his investments are able to continue growing by 6 to 7 percent a year, he could likely afford, over time, to sell slightly more of his investment portfolio each year to cover the rising costs of living. [2017] - Andrew Hallam

To ensure the best chances of success, owning an interest in all of the world's stock markets is a good idea. [2017] - Andrew Hallam

Over an investment lifetime, it's a virtual certainty that a portfolio of index funds will beat a portfolio of actively managed mutual funds, after all expenses. But over a one-, three-, or even a five-year period, there's always a chance that a person's actively managed funds will outperform the indexes. [2017] - Andrew Hallam

Investing a lump sum, as soon as you have it, usually beats dollar-cost averaging. In other words it's usually best to invest as soon as you have the money. [2017] - Andrew Hallam

The average investor ends up with a comparatively puny portfolio compared with the disciplined investor who puts in the same amount of money every month into index funds. By adding equal dollar sums to their index each month, the investors would have bought a great number of units when the markets were low and fewer units when the market rose. This allowed them to pay a below-average price over time [2017] - Andrew Hallam

During the 20-year period between 1994 and 2013 (5,037 trading days), US stocks averaged a compound annual return of 9.22 percent. But investors who missed the best five trading days would have averaged just 7 percent per year. If they missed the best 20 days, their average return would have been just 3.02 percent per year. If they missed the best 40 trading days, the investor would have lost money. [2017] - Andrew Hallam

If your account has a bond index, a domestic stock index, and an international stock index, you'll have a good chance of success. A rule of thumb is that you should have a bond allocation that's roughly equivalent to your age. Some experts suggest that it should be your age minus 10, or if you want a riskier portfolio, your age minus 20. Common sense should be used here. A 50-year old government employee expecting a guaranteed pension when he retires can afford to invest less than 50 percent of his portfolio in bonds. [2017] - Andrew Hallam

In any given year, the stock market can go crazy, rising or dropping by 30 percent or more. Dispassionate, intelligent investors can rebalance their portfolios if they're too far from the stock/bond allocation they set for themselves. If the stock market falls heavily in a given month, the investor will find that his portfolio now has a lower percentage in stocks. He should add to his stock indexes. If the stock market rose considerably during another month, he should add to his bond index. [2017] - Andrew Hallam

Usually investors don't need to address their stock/bond allocation more than once a year. But when the stock markets go completely nuts--dropping by 20 percent or more--it's a good idea to take advantage of it if you can. [2017] - Andrew Hallam

Americans should have a nice chunk of money in a US index; Canadians should have a good-sized chunk in a Canadian index. After all, it makes sense to keep much of your money in the currency with which you pay your bills. Investors can increase their diversification by building a portfolio with global exposure. A total international stock market index would fit the bill. To keep it simple, you could split your stock market money between your home country index and an international index. [2017] - Andrew Hallam

If you're making monthly investment purchases, you need to look at your home country stock index and your international stock index and determine which one has done better over the previous month. You need to add newly invested money to the index that hasn't done as well. That should keep our account close to your desired allocation. [2017] - Andrew Hallam

You take a large risk buying an index focusing on a single foreign country. It's better to diversify and go with the total international stock market index. Within it, you'll have exposure to older world economies such as England, France, and Germany, as well as the younger, fast-growing economies of China, India, Brazil, and Thailand. Just remember to rebalance. If the international stock market goes on a tear, don't chase it with fresh money. If your domestic stock index and the international stock index both shoot skyward, add fresh money to your bond index. [2017] - Andrew Hallam

MoneySense magazine's founding editor, Ian MaGugan, won a Canadian National Magazine Award for an article adapting the couch potato strategy for Canadians. His method was simple. An investor splits money evenly between a US stock market index, a Canadian stock market index, and a bond market index. At the end of the calendar year, the investor simply rebalance the portfolio back to the original allocation. If the US stock market index did better than the Canadian index, then the investor would sell some of the US index to even things out with the Canadian index. If the bond index beat both stock indexes, then some of the bond index would be sold to buy some of the Canadian and US stock market indexes. Of course, if you're making monthly contributions to the account, you could rebalance monthly by simply buying the laggard--to keep your allocation evenly split three ways. [2017] - Andrew Hallam

Smart investors add money to their investments every month. They rebalance once a year. [2017] - Andrew Hallam