How To Invest Like A Pro

I began working in the financial services industry when I was 24 years old.  A few – um – decades later, I feel I have learned a thing or two. However, like others who have been in a particular career for a length of time (I’m thinking here specifically of anyone who works with computer software, for example) what I know seems commonplace to me and I tend to think that everyone else knows it too.

So, I was somewhat taken aback when I was recently asked, “What is the stock market, anyway?”

We do get a lot of questions about investing. It’s not difficult. However, just like any other skill you need to gain some knowledge and do a bit research to be successful.

How To Invest Like A Pro

Whether you elect to go the do-it-yourself route, or prefer to work with an advisor, there’s never been a better time to be an investor. The large number of investment products available now allows you to choose what’s best for you. Many products didn’t exist for the retail investor even a couple of decades ago.

It can also be a difficult time. All those choices can be stressful. Many people new to investing don’t know where to begin. Financial terms and jargon can be confusing. Complicated doesn’t necessarily mean profitable.

Let’s face it. The days of going off into the retirement sunset with a guaranteed lifetime pension are disappearing fast. We’re basically on our own and we need information.

Do you know:

  • How different fees are calculated – MERs, trailing fees, trading fees, front-end loads, deferred sales charges, account fees, discretionary fees, advisor fees – and the effect on your portfolio?
  • How returns are calculated and what will be the impact of the new account-performance reports?
  • How to create your investing plan?
  • What is the TSX, S&P 500 and Dow and what do those numbers mean?
  • Do you know what your advisor is talking about when she rambles on about smart beta, top-down investing, low volatility and fundamentals? Do you feel lost or intimidated?
  • The difference between index mutual funds and ETFs?
  • What are managed funds or active management?
  • How to research stocks?
  • What are bid and ask prices and should you just take the market price?
  • How bond yields are calculated and what is a bond premium or bond discount?
  • The best way to manage your RRSPs and TFSAs?

If you want to start do-it-yourself investing and find yourself somewhat overwhelmed about how to begin, or you want to know just what your portfolio manager is doing, this is the place to be.

Since everyone is unique we can’t tell you what to do or what to buyWhat we can do is give you the information to help make you a successful investor.

If you have a question about investing, want to know more about different strategies, or need some terms defined in plain language, leave me a detailed comment and the topic may be worked into a future post so you can be on your way to investing like a pro.

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  1. Darren on January 18, 2017 at 8:41 am

    This article made no sense. I thought you were going to show me how to invest like a pro

    • Douglas on January 18, 2017 at 11:26 am

      “If you have a question about investing, want to know more about different strategies, or need some terms defined in plain language, leave me a detailed comment and the topic may be worked into a future post so you can be on your way to investing like a pro.”

      Seems pretty self-explanatory…

      • John on January 18, 2017 at 1:25 pm

        Still a misleading article title. “How to Invest like a Pro”. Instead the article spews some jargon and terms – I suppose if you already know all the terms then you’re already a “pro”.
        I think a better title would have been “Would you like to invest like a pro?”. Or “Tell us what you want to learn about”.
        This article by itself adds nothing of value, but if they wanted to get some feedback and ideas for future articles, that’s a different thing.

  2. Mel on January 18, 2017 at 9:25 am

    Same here, I was expecting some more info about investing like a pro

    • DJ on January 19, 2017 at 12:52 pm

      I don’t know, I like this tailored approach better than simply an article with advice that may or may not apply to you. If you want to invest like a pro just ask her the question you were hoping the article was mysteriously going to answer for you.

  3. Laurel on January 18, 2017 at 11:06 am

    I have a tfsa at investors group and would like to know when it makes sense to transfer my account to a discount brokerage or something like questrade. I know I’m paying too much in fees but it looks like I’ll get nailed with deferred sales charges if I sell or transfer the funds.

  4. JohnC on January 18, 2017 at 11:14 am

    I want to know about asset allocation when it comes to having multiple accounts. Our household has two rrsps, two tfsas, plus a non-registered account. Which account is best for Canadian equities, foreign equities, bonds and fixed income. Plus how does it all come together?

  5. Janet on January 18, 2017 at 11:28 am

    How safe are robo advisers?

    • Darren on January 18, 2017 at 11:51 am

      Very safe. Regulated by the government. Insured up to one million

  6. Echo on January 18, 2017 at 11:50 am

    A reader sent in this question via email:

    “Hi, I live in Quebec and am currently represented by BMO Nesbitt and Burns but I’m looking for alternatives with lover fees. Also, I’m not feeling like I can trust the person managing my money.

    You’ve spoken a lot about ETF’s and i found something called Questrade. I’d like to know what you think about Questrade? Is this a viable option and is it something that can be trusted?”

  7. Richie on January 18, 2017 at 12:19 pm

    You mentioned bid-ask spreads; should one always use a limit order when placing a trade?

    • Denis on February 27, 2017 at 4:35 pm

      yes, control, get stock cheaper a little unless you really want it. I use the middle between bid-ask and usually get filled.

  8. Mandy Stephenson on January 18, 2017 at 12:39 pm

    My cousin sold a house here in Toronto and put a $650,000 profit after income taxes and closing costs, real estate fees etc. in his pocket. He bought a home outside of Toronto for cash $450,000 about the same size.

    He is 34 years old and will be married in July this year, lives in the house and rents the rest he doe no use. This brings in gross $1,500 a month but net around $1,000 a month. He only needs to work part-time now, 23 hours a week making a net paycheck of $825 bi-weekly. He still has $10,000 in 1.95% savings account plus $15,000 a year for 5 years, 1-5 year maturing 2017, 2018, 2019, 2020, 2021 laddered GIC financial cushion he saved years back.

    He has no debts, no car loans, no mortgage, no lines of credit etc. He has an advisor that invested his $650,000 all in various strip bonds in TFSA’s, RRSP’s, non-registered accounts. Every year he will make in-kind TFSA and RRSP contributions which will defer and cut income taxes.

    This will mean a $1,350,000 in compound interest or $43,548 on average per year by his retirement at 65 years old which with principal total investments worth $2,000,000 by retirement.

    Looking back at real estate prices and slower gains coming his $450,000 home will be probably be worth at least a $1,000,000 by his retirement.

    His advice to me is save often and try to do 15% to 20% of net income, max out RRSP’s, TFSA’s and other tax advantaged accounts, buy a house or primary residence, try to generate rental income plus keep debt in reason and pay it off in 10 to 15 years. If that is not possible, make sure mortgage debt is no more than 3 to 4 times your gross annual income.

    • Wes Philips on January 18, 2017 at 2:44 pm

      Mandy Stephenson, all I can say is your cousin is one lucky guy to be able to afford to buy a house ( cash? ) and sold it with $650,000 profit!
      He must have come into a huge chunk of inheritance money or hit a huge 649 or Loto Max jackpot.
      He’s 34 and probably graduated from university at 24 with a professional degree and earns big bucks in his chosen profession. To save only 15 – 20 % of net income to have enough to be able to do what he does is highly commendable.
      I suggest he should write a book detailing his life, investment philosophies etc so we can all learn from his amazing accomplishment. He’ll make money from his book and plus he can earn more income doing the lecture and financial seminar circuits.

    • Denis on January 21, 2017 at 8:25 am

      I think he should retire much earlier than 65 and enjoy all that money. Sounds like me but he seems to have gotten there earlier thanks to the Toronto real estate market.

      I agree with him to using debt and in particularly mortgages judiciously. I am on my 4th mortgage and 3rd home (I am in my dream home and retired at 54). The 4th mortgage (at these great rates) to change all windows (house is paying for itself – sort of). My father was afraid of debt and rented most of his life and I was not going to follow that example. Lucky for him, he lucked into a full military pension at 54 IMO.

  9. J on January 18, 2017 at 5:07 pm

    I have a small define benefit pension from work with OMERS. I would like to invest to have a bigger pension. I have the option of buying into the pension and having that top up be a define contribution. Should I invest in it or should I be looking at mutual funds?

    • darren on January 18, 2017 at 5:26 pm

      Buy into that pension. For sure. One Hundred Percent. It will probably be indexed to inflation. My wife did that and its really paid off.

    • Denis Hache on February 27, 2017 at 4:33 pm

      I took my CN pension into a LIRA when rightsized as I wanted to determine when I take it and flexibility BUT that’s me. It has worked very well due to good investing and this crazy bull market.

  10. WeesieOnPI on January 18, 2017 at 5:19 pm

    Boomer & Echo,
    Thanks for asking if I have an investing question!

    I’m 68 with RRSPs in GICs at several banks and in a brokerage account. I’ve assumed I’ll convert them to RRIFs in my 71st year and start withdrawing the minimum mandated by CRA.

    I have questions about my multiple RRSPs: Are fees charged to convert RRSPs to RRIFs? Will I be required to withdraw the minimum, as mandated by CRA, from each institution’s RRSP account, or am I allowed to withdraw the totalled minimums from one account? Would it be smarter to consolidate my mulitple RRSP accounts into one, paying multiple transfer fees now, but avoiding possible later pain?

    I’d very much appreciate learning more about this.

    Thanks, WeesieOnPI

    • Doug Timmerton on January 18, 2017 at 5:54 pm

      My parents are in a similar situation. They converted their RRIF’s just 2 weeks ago and had them put in 5 year GIC’s just recently. They are in 2.4% to 2.5% fixed rates with some banks and credit unions.

      They are both 67 years old and their chartered accountant told them to take out $6,100 per $100,000 RRIF account. This way they will stay in the required CRA annual RRIF withdrawals.

      The printout they got from their chartered accountant shows that their 4 accounts $100,000 each will payout $24,400 a year and last between 22 to 23 years at 2.4% to 2.8% 5 year GIC rates. They should be good until their early 90’s.

      Their reserve savings account at PC Financial 2.25% rate is $55,000 so when money is needed it is there.

      They have C.P.P and OAS combined is currently $1,800 a month with a modest house worth $350,000, no mortgage, not owing money to anyone. They have and always maximum contributions of $102,500 TFSA’s of in REIT’s 3.75% to 4.55% yields.

      This brings in a good $1,000+ a month every 3 months in additional income,

      • Denis on February 27, 2017 at 4:31 pm

        I would say those returns are not very high but my parents (early 80’s) are in GIC ladders and don’t need the money. They sleep well at night and their money is safe.

  11. Wes Philips on January 19, 2017 at 1:08 pm

    I would like to know what types of foreign investments ( most interested in stocks ) can Canadian investors invest in their RRSP, RRIF, TFSA and Open accounts that don’t charge Withholding and Non-Resident Taxes? Thanks for your help.

  12. Carl on January 19, 2017 at 10:52 pm

    Is it a good strategy to buy employee stock purchase plan? you consider this a good alternative for long term investing?

    • Wes Philips on February 27, 2017 at 1:01 pm

      Hi Carl,

      When I was working I did participate in the company’s ESP Plan in which the company gave 5% share price discount compared to when purchased in the open
      market. I believed that the company was strong and had a great management team. The plan was cancelled when OMER bought us out and brought in their own management people and everything changed after that and I left the company transferring out my ESP shares to my own investment account.

  13. Gert on February 27, 2017 at 12:02 pm

    There have been a lot of good questions on this issue. I was hoping to see some good answers.

    Will they be answered?


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