“To ensure a prosperous and financially secure future, we need to understand the potential roadblocks that can prevent us from succeeding. Knowing the rules of the playing field can save you a lot of headaches down the road – and dramatically improve your odds of future success.”
–Keith Matthews, Author, The Empowered Investor.
Your Canadian guide to building a better investor experience is here folks. Before the link to this book I want to share with you my takeaways from The Empowered Investor, a book sent to me by the author who is a partner and portfolio manager at Tulett, Matthews & Associates. Tulett, Matthews & Associates specializes in discretionary portfolio management services for Canadian investors and they write a darn good investing book as well.
Takeaways and highlights
“The lack of a clear vision is the root cause of the majority of challenges faced by investors.” I don’t think I can argue this point. In Chapter 1, Keith describes in detail the eight common pitfalls that plague most investors. The Empowered Investor reminds us that lack of proper diversification (by asset class, industry, country and currency) is one of the top pitfalls and to avoid this, investors must be broadly diversified to ensure your portfolio will not be devastated by any one event.
The Empowered Investor on the financial industry
“The investment advice business is like no other. Smooth marketing campaigns and the sure-fire tips of industry “experts” are designed to make us believe that your financial well-being is their number one priority. Unfortunately, the investment industry does not make a profit simply by ensuring that your financial wealth is intact; it makes money by selling you products and strategies.”
Here’s some the best of the rest from The Empowered Investor:
- “Combining asset classes that do not behave alike will improve the returns of the entire portfolio.”
- Canadian investors should consider the following asset classes:
- Canadian government and corporate bonds
- Real return bonds
- Canadian and global real estate investment trusts (REITs)
- Equities from Canadian, U.S., International and Emerging markets (large, value, and small companies included)
- There are a number of advantages that come with investing in index-based and passive-managed asset classes: diversification, consistency, transparency, low costs, competitive performance, potential for tax efficiency, and simplicity. “Index-based and passively-managed asset class funds are precisely designed to accomplish a specific objective: to track the performance of a specific index or asset class.”
- “Investors cannot earn higher returns without taking on greater risk.”
The Empowered Investor on IPS
Considered “the first day of the rest of your life” Keith suggests all investors have an Investment Policy Statement (IPS) to bring vision, clarity and action to your investment journey. As a DIY investor I probably enjoyed and got the most out of this Chapter. An IPS is something I’m working on and The Empowered Investor confirmed many of the things I’ve been thinking about and included a few items I’ve overlooked.
Understanding investing pitfalls, understanding your risk and understanding your objectives are three-major pillars of investing that many investors struggle with. Based on what I read from Keith’s book it was clear his goal was to inform, inspire and empower Canadians. His message to Canadians is clear: investing doesn’t have to be chaotic, overwhelming and confusing. It can be relatively stress-free, transparent and calm to the point where you know where you are and you know where you’re headed.
For the tactile reader who loves a good book in their hands, I have one hardcopy of The Empowered Investor to giveaway thanks to Keith Matthews and his team at Tulett, Matthews & Associates. If you simply can’t wait to get your eyes on The Empowered Investor click this link to buy the book.