Personal finance coach Michael Kim and I chat about common mistakes that new investors make, and how to avoid them. We also chat about Mike’s investing journey, as well as his relationship with money and why he started his coaching business. 

Key Takeaways

  • Passive vs Active Investing: passive is buying and holding with the goal of matching the market. Active is characteristically more trading activity (i.e. buying and selling frequently) with the aim of beating the market\
  • Mike uses a passive investing strategy because there is the least amount of room for error and he believes it is the best use of his time TIME
  • The four mistakes new investors make are:
  1. Not investing for a purpose. You should invest to achieve your financial goals. Answering that question will help you decide what to invest in
  2. Not having a strategy. Do you know what you are going to do if a recession occurs/lose your job/get closer to your financial goals? Definitely have a plan in place so that you know what to do in every single one of these scenarios.
  3. Investing without a foundation – it’s important to understand the basics of investing, and understand what you are investing in, such as different asset classes, what a TFSA is, what an RRSP is, etc.  
  4. Thinking investing will solve all your problems because you need a lot of money to generate a significant return. There are other areas to focus your time on to potentially make more money (i.e. start a side hustle), then you will have a larger nest egg to invest and be able to generate larger returns on investment

Tips/Tricks:
Investing is not hard, it’s as simple as going to a website on Amazon and clicking buy
To start investing, you don’t start with investing.
First look at your financial goals, your current financial situation, and your budget and emergency fund
Once you’ve done the groundwork, you’ll know what to invest in

Mike’s Links

http://lifeplanting.com/

Instagram

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Today Gloria is joined by her friends Jill and Maddy. We talk about investing for the long term. We go over investing basics – asset classes, risk tolerance, and different options for investing. We also discuss our investing strategies and stories. We also get into whether there are gender differences in investing. Canadians, 2021 means $6,000 more in TFSA (tax-free savings account) contribution room! Let’s get this bread!

Key Takeaways

  1. Investing is all about making money while you sleep. You invest your money and then generate passive income through dividends and capital gains when you sell the security. There is an important distinction between saving and investing. When you have your money in a savings account, you’re basically losing money because interest rates are so low and does not keep up with the rate of inflation. Whereas, when you invest – your money is growing at a steady rate (though there is risk involved), historically the stock market as a whole has grown over time.
  2. ETF stands for exchange-traded fund which is typically a collection of securities that track an underlying index. This can be stocks or bonds. Examples are the S&P 500, which is comprised of the 500 largest US companies, or the Agg, which is the Bloomberg Barclays Aggregate Bond Index which is comprised of US government and corporate bonds.
  3. Ways you can invest:
    • Robo advisors – this is ETF based investing, and it’s done automatically for you
    • DIY through a discount brokerage ( or through your bank – you pick stocks or ETFs
    • Mutual funds – an actively managed fund that invests on your behalf, a collection of securities similar to ETFs but are managed actively but a professional
    • GICs – you can buy these through your bank
  4. You are able to find out your TFSA contribution room on your CRA website account

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Sources/Further Reading

Harvard Business Review – When will we see more gender equality in investing?

The CFA Institute – The equality equation: three reasons why the gender investing gap is closing

The New York Times – A trillion-dollar question: why don’t more women run mutual funds

Sign up and get $10 to trade on Wealthsimple Trade

Sign up for no-fee banking with Tangerine or EQ using my referral code!

Tangerine – new accounts get 2.5% interest (first 5 months), use my Orange key: 40411403S1

EQ Bank – all accounts get 1.5% interest, TFSAs get 2.3% interest!

Thanks so much for tuning in!