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Shopping for bonds: a tale of two markets

If you’re the kind of investor that doesn’t buy and sell individual bonds because you prefer to own bond mutual funds or exchange-traded funds (ETFs), then you can ignore this article and move on. Read more…

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Canadian investors: cross your fingers!

When it comes to your investments, do you think your advisor and their employer should be required to act in your best interests when they give you advice? Read more…

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Switching preferred shares: Black Diamond runs for the Experienced Investors only

So, in keeping with our comparison of investing with skiing and the need to check out the signposts before you leap, this time round we’re going to talk about the Black Diamond runs of selling one deeply discounted/over sold preferred share to buy another. Read more…

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Buying over-sold rate-reset preferred shares in today’s market

Becoming a better, stronger skier has a lot in common with becoming a better, stronger investor. For both tasks you need to 1) know the basics 2) understand the conditions and the landscape 3) assess (honestly!) your own skill level and appetite for risk 4) want to improve (learn new and more advanced techniques and try more challenging runs/investments!) And for investors that want to venture off the preferred share Bunny Runs (like the ones we discussed in our last article), the next step in becoming a better, stronger investor would be to shop around for cheap, rate-reset preferred shares. Read more…

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Wouldn't it be great if investments came with a rating like a ski run?

Just imagine! Then you’d know what you’d be getting yourself into with just a quick glance! You’d know if you’re going to be somewhat comfortable, or on the other hand, way in over your head! Wouldn’t that be handy? So, let’s borrow from the ski resorts and use their rating system to talk about a few preferred share investment opportunities. Read more…

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How to buy preferred shares: 5 simple rules

Last month, two of our sample investment portfolio’s had their TD Bank preferred shares redeemed by the bank and so I was forced to look for a suitable replacement. In the end, I added a preferred share issued by Canadian Utilities Ltd. Read more…

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Distribution yield: getting blood from a stone

For years now investment companies have been caught in a tightening vice – interest rates and investment yields continuing to fall at a time when greater numbers of investors are retiring and demanding higher income from their investments. The investment funds have merely given investors what they’ve demanded – higher regular payments from their investments by paying out the investment’s earnings plus a portion of the investor’s own savings (return of capital). And we investors come away believing we’re satiated and happy. Read more…

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Investment risk: needs vs. wants

When working with clients I have always approached investing their hard-earned savings with this question in mind – Do they need to take investment risks or do they want to take investment risks? In much of today’s investing world, however, investors are very rarely asked how much investment risk they need to take with their savings. Instead many of today’s investment pros are much more interested in how much investment risk you can tolerate, or how much do you want. Read more…

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Look out! Investment yield vs. investment distributions

We’ve just finished updating our exchange-traded fund (ETF) catalogue and just had to comment on a growing trend in the fund industry that we believe is hurting investors – from both an investment and retirement income perspective. Read more…

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Winning investment portfolios: don’t forget the playbook

Does your investment portfolio come with a playbook? Probably not! For most of us, our investment portfolios are simply a collection of the individual investment decisions that we‘ve haphazardly made over the years, jumping in here and there, with no real guiding “light,” as it were, in our investing decisions, except for one general simple goal – to make money! And if this investment strategy is working for you, then by all means, have at ‘er!, as they say. Read more…

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Trade a lot? Maybe you (and the pros you hire) shouldn’t!

In our past couple of articles we’ve been looking at DALBAR’s latest studies listing 3 main reasons why many of us are such chronic underachievers when it comes to our investment performance. Here they are again to refresh your memory: Read more…

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Get out of the trap: find out how much your investments are costing you

If you’re like most Canadians, over 2/3rds of us have 50% (or just over $1.0 trillion) of our hard-earned savings invested in mutual funds. But did you know that mutual funds are one of the most expensive forms of investment available? Read more…

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Investor bad behaviour: buy high, sell low

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The average investor: chronic underachiever

DALBAR Inc. is an independent company that develops standards and measurement systems for the investment, life insurance, healthcare and banking industries. According to their latest research, the average investor has underachieved for the past 20 years. They say this is nothing new. In fact, DALBAR finds that if nothing else, the average investor is boringly consistent. It would appear that we’re always under-performing those investment indices (S&P500, Dow Jones, etc.) that we love to watch and use in our carefully crafted financial, retirement and investment plans. And if this case of consistent underachievement weren’t so serious, it would be down right funny. Read more…

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Performance standard deviation: measuring investment volatility (not risk!)

This week marked the deadline for public submissions to the Canadian Securities Administrators (CSA) as it develops new guidelines for its mutual fund risk classification system. Specifically the CSA is proposing that each mutual fund manager be required to calculate the volatility of their mutual fund’s past investment performance in the form of its performance standard deviation and that calculated number will be used by the fund’s managers to classify the fund’s risk rating. That risk rating is to then be published on the fund’s Fund Facts form for investors. Read more…

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Properly assessing risks and returns on the investment tight wire

The terms risks and returns are two of the most commonly used words you hear in any discussion about investing. For most of us, when we talk about our investment returns we simply mean how much money our savings made for us – or lost for us! And we like to quantify our returns by quoting a single number, where we say something like – Yes! I just made 10% on that investment! Or, as can also be the possibility – D’oh! I just lost 15% on that dumb investment! In any case, we like to think that a simple, single number says it all. But does it really? Read more…

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Question: How many mutual or exchange-traded funds should I own?

When it comes to investing, many average Canadians get confused by this question. We’re often told that we need to diversify our investments if we want to lower our investment risks, but how much diversification do you need? Read more…

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Are you feeling lucky punk? Well, are you?

When it comes to choosing investments, I sometimes think investors feel like the punk anxiously staring down the barrel of Dirty Harry’s 44 Magnum. And just like the punk contemplating the odds that Harry’s gun is out of bullets, I think investors anxiously look at a mutual fund contemplating the odds of the fund having another great year. They know the funds’ managers have had a great run for 3 or 4 years, but is that run going to last or are the funds’ managers out of bullets as well and is the fund about to fall? Read more…

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Comparing PTRs: a case study

As we have discussed previously, the Portfolio Turnover Ratio (PTR) for any given mutual or exchange-traded fund is a quick and easy tool to use when you’re trying to figure out which is the better investment for your savings. A fund’s PTR gives you a way to judge how much activity and risk the professional money managers are taking on to generate their investment returns. Read more…

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Portfolio Turnover Ratios (PTRs): Break away from the flock

Did you know there’s actually a name used by investment industry insiders to describe retail investors that blindly, mindlessly follow investment recommendations? They call those investors sheeple (that’s sheep + people). And as we discussed in our previous article it would appear that Canada has a lot of sheeple when it comes to investing in mutual funds and exchange-traded funds (ETFs). Read more…

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Practice safe investing: Get protection by using a PTR!

So, how can you protect yourself from that second layer of professionals when you invest in mutual funds or ETFs? Answer: Get to know a fund’s Portfolio’s Turnover Ratio (PTR)! Read more…

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Oil’s market price today: where do you want to sit as an investor?

As we discussed in our last article, just like those investors that bought into the gold story (rising inflation due to money printing), most oil investors have also bought into the oil story. You know the one – where we’re told how oil’s market price is all about Peak Oil's diminishing supply in the face of the growing demand out of emerging markets (China et al). Read more…

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Do you know where your investments are when you go to sleep at night?

In my previous life as an investment advisor, my relationship with prospective new clients would always start as interviewer and interviewee. In other words, at that first meeting the goal was for both of us to ask questions to learn more about each other’s personalities, as investors and individuals, and to determine if we were a good match. Read more…

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Warning: is oil the new gold?

Anyone watching oil prices right now has got to be asking his/herself the question, is the future of oil prices going to fall to the Dumber Guy Rule? That’s the investing rule that governs the market price of assets that don’t produce anything, don’t manufacture anything, don’t create any new technologies or processes, don’t create any revenue or profit, and don’t pay investors any interest or dividends. It’s the rule where you can’t value investments using the usual business and investment valuation models to determine current and future market prices. You know, the same rule that brought down the price of gold. Remember? Read more…

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Mutual Funds vs. ETFs: and the loser is … you and me, I’m afraid

In the investment industry the only measure of success that really counts is money – specifically how much money you can get your clients to hand over for you to invest. It doesn’t matter if you’re an investment advisor, professional money manager, investment firm, mutual fund, or exchange-traded fund (ETF). All that matters is how much money you get to work with – and charge fees on. And this money is called your assets under management (AUM). Read more…

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Ease up: even the experts find it difficult to re-balance their investment portfolios

As an investment advisor I’ve spent years taking courses to learn about managing investments through designing, monitoring and managing diversified investment portfolios. And I’ve spent decades helping individuals plan, save and invest for their futures. I’ve enjoyed the ride in some really great stock markets and I’ve also endured some really horrendous ones. So, no one understands better than I do the dire need for smarts and sound logic around re-balancing an investment portfolio on a regular basis. But even with all of my experience and understanding I still don’t find it any easier to actually pull the trigger and sell, which is what re-balancing investments is all about – the decision to sell. Read more…

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Conservative investor or aggressive trader – which one are you?

How you view your pennies in the piggy bank depends on your investment personality. When you invest your hard earned savings, do you tend to invest conservatively – buying and holding your investments for long periods of time? Or do you like to aggressively trade your investments frequently following market trends, money momentum and anticipating the next hot market sector? Read more…

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Where's the best place for my savings – an RRSP or a TFSA?

That depends. Are you an average Canadian in need of some friendly wise investing reminders or an above-average Canadian who actually knows how to save their hard-earned money more wisely? If you’re an average Canadian the answer is easy: get yourself a Tax-Free Savings Account (TFSA) and just ignore the Registered Retirement Savings Plan (RRSP) because that’s what the math says. But first you need to figure out which type of investor you are. Read more…

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Finding Tax Losses Can Feel a Lot Like Finding Waldo

Sometimes unfortunately hunting for income tax losses can feel more like a round of Finding Waldo and just as much fun where you’re never quite sure what exactly you’re looking for and where you should be looking. So, let’s try to simplify the game and figure out what you need to look for. Read more…

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Gold: Should You or Shouldn’t You?

I must confess. I’ve never been much of a gold bug so my answer to that question might not be the more common response. And I admit I’ve never understood how the market values gold or the reasoning behind holding gold. Read more…

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The Toronto Composite Index: a "closet" mutual fund?

How often do you look at the Toronto Composite Index? Once a day? Twice? Three times? More than that? Let’s face it. A lot of us closely monitor the Index’s ups and downs using it as a quick proxy for our own investments. But should we? Is the Toronto Composite Index still relevant to investors today? Read more…

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