What are the biggest mistakes people regularly make when trying to reach their financial goals?  Canadian investors are often guilty of being too cautious, too conservative and too cheap.

Related: Avoid These 4 Investing Mistakes


While no one would advocate taking imprudent risks, being too cautious with long-term investments and sacrificing long-term return for short-term “safety” makes it harder to meet retirement objectives.

Being too cautious gives rise to procrastination.  It’s a big decision.  When people don’t know what to do, they don’t do anything because they’re afraid of making a mistake.

When stocks have fallen they’re too scared to buy into the market.  When stocks are high they fear the market is too expensive and that a downturn is imminent.

Related: Stock Market Corrections – Do You Buy, Sell or Ignore?

On the other hand, some beginning investors become overly aggressive and chase returns following short-term industry performance ratings and are not prepared for any downside.

They sell their assets when they fall in value, thereby ensuring they take a loss.  After being burned they become overly cautious and swear they’ll never invest in equities again.

For many retirement plan investors this is their life savings, no matter how large (or small) the account, and they don’t have any other monies to fall back on.

Many of these investors are cautious because they can’t afford to lose anything.  The first sign of a drop in the market causes them to go into protection mode and try to salvage what’s left.  This leads to the high probability of not recouping their losses.

Related: Can You Succeed With An All-GIC Portfolio?


Failure to understand your own personal objectives, risk-tolerance level and time horizon makes you unable to make the right investment decisions for yourself.

Some people fear risk unduly when it comes to investing, so too many save instead of investing for the long term – putting billions of dollars into low interest savings accounts, term deposits, money market products and GICs.

As we approach and enter retirement our ability to take financial risks decreases so it’s logical to lower our equity allocations.

However, one of the biggest mistakes people make is being too conservative.  It might seem smart to be very conservative with your money, but it might not grow enough to support you in retirement.

After inflation and taxes, the return on these is next to nothing leaving you with loss of purchasing power in the future.  For most people, investing in this manner just won’t get the job done.  The real risk they face is running out of money, not losing it.

Related: Are Bonds A Good Investment Today?


“Why am I paying my advisor for something I could easily do myself?”

“I took his advice and ended up losing money!”

“Financial planners are a waste of money.”

“These investment fees are way too high!”

We’ve all heard some version of these outraged comments.

People are cheap.  If they don’t see any value from the fees they pay, they bail.  They open a low cost discount brokerage account and begin on-line trading.

For every proficient do-it-yourself investor, there are probably at least 10 who have no clue how to choose and research an investment purchase.  They make decisions based on their emotions and get tips from their co-workers.

They choose investments with the lowest MERs regardless of relative performance.  They attempt to time the market.  They don’t have a plan.

Related: Why Index Funds Outperform Equity Mutual Funds

They try to do their financial planning by themselves without seeking outside advice.  They think a financial planner is going to cost them money when they can often save them money.

Final thoughts

It’s never too late to improve your financial health.

  • Work with an advisor.
  • Pick an asset allocation and stick with it.
  • Educate yourself.  The more you improve your investing knowledge, the more comfortable you will feel.
  • Don’t look at short-term media reports.
  • Invest in great companies and, apart from monitoring their performance from time to time, forget about them.

There’s a good chance that you are in better shape than you realize.  

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