Saving and investing resources for newbies

Every month the My Own Advisor inbox gets emails from readers who are just starting out on their investing journey.  Again, thanks for your emails folks and keep them coming.

It’s been some time since I’ve shared some of my favourite free (and inexpensive) saving and investing resources, so if you’ve been looking for some of those, then this post is for you.  Spending some time with these resources below now or in your near future could save you save you thousands of investing dollars later…

Want to feel empowered?

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.

Well said Keith.  Your Canadian guide to building a better investor experience is here folks. The Empowered Investor includes the eight common pitfalls that plague most investors.  This book educates new investors that lack of proper diversification (by asset class, industry, country and currency) is one of the top pitfalls to avoid.  You can read my review of this book here.  A free copy of The Empowered Investor should still be available here.

Who doesn’t value simplicity?

There is a book that discusses indexing and how to keep investing simple from the start: The Value of Simple by John Robertson.  The Value of Simple provides a nice overview of the various accounts most Canadian investors might be expected to own:  a Tax-Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP) and a Registered Education Savings Plan (RESP), and how to optimize the use of these accounts.  For $10 The Value of Simple could save you thousands of dollars.

What the heck should I invest in?

Reader to My Own Advisor: I did a bunch of research and it seemed the best choice for having a starting amount of approximately $15k was to start with (TD) e-series index funds…it seems the recommendation to start investing with ETFs is at or over $25k due to costs of trading/re-balancing etc….what do you think?

In my opinion there is no absolute right answer regarding how much your investment portfolio must be worth to own Exchange Traded Funds (ETFs) or individual stocks for that matter. Your portfolio value could be $1,000, $10,000 or more. However for me I know I transitioned to using ETFs and buying individual stocks when my overall portfolio was over $25,000.  I did this for these reasons you can read about here.

What the heck should I invest in – part 2?

It took me some time to figure out our financial plan, and although it continues to evolve and mature, I feel we’re on a good path.  I get a number of questions about what to invest in, how portfolios should look, what is the right ETF product to buy and hold, and more.  I had a post here about my favourite ETFs but these aren’t the only options for your portfolio, far from it.  To help you decide what’s right for you check out these great (inexpensive) resources:

  • MoneySense – Beginner’s Guide to Personal Finance(starting around $4.99)
  • MoneySense – Guide to the Perfect Portfolio(starting around $4.99)
  • MoneySense– 2013 Canada’s Best Discount Brokerages (starting around $2.99)

You can buy these MoneySense books here.  

Need more guidance on Exchange Traded Funds (ETFs)?

As a novice investor, and with hundreds if not close to a thousand of ETFs to choose from, knowledge is your friend.  Although this is an older version you check out Rob Carrick’s (free) Guide to ETFs here. This guide will narrow your search considerably.  An updated 2015 buying guide article about ETFs is here.

Detailed independent advice?

Let’s face it – nobody wants to save any money.  Let’s look at some examples.  Your advisor makes money off you in several ways. By commission, on new issues of structured products; by fee-for-service or by front end or back end fees on products to name a few.  I suggest you do your own due diligence when it comes to investing or let companies like 5i Research do the work for you.  They have a partnership on my site because I believe in their conflict-free investment research.  5i Research does not trade in any stocks it mentions.  If a company is lousy, they tell you in their newsletter. If they tick off a CEO, they don’t care, they don’t pay 5i’s salary.  They work for members.  You can subscribe to 5i conflict-free research here.

Want to stop sweating the financial stuff?  Don’t overthink it

When it comes to personal finance it’s easy for many of us to get lost in translation.  Preet Banerjee’s latest book entitled Stop Over-Thinking Your Money! The Five Simple Rules of Financial Success is a great read that I thoroughly enjoyed.  The book appeals to beginners who are looking for advice to start their financial journey and it also serves up some straight talk reminders for those already on their financial paths.  Get the book for $15, get organized and feel a heckuva lot better about your financial affairs.

Want some free stock screeners?

For dividend investors, buying and holding dividend paying stocks, I’d argue stock screening tools are not an absolute necessity. A bold statement I know. Why do I feel that way? Well, first of all, established dividend-paying companies are well-known entities. These companies are not “hot stocks”.  People don’t “tip” these companies around the water cooler. There are probably less than 50 of these great, consistent, dividend-paying companies in Canada.  That said, you might want to keep tabs on the financial news of your existing portfolio or research new companies to invest in.  Here are some great stock screeners and portfolio tools:

  • TMX Money Stock Screener – for me this free one has everything. I can add or subtract criteria as I need it and it is very user-friendly.
  • Stingy Investor – I’m a big fan of Norm Rothery. I use his “Screen” tab so I can sort either the TSX 60 or DJIA 30 stocks. I’m a buyer and holder of primarily blue-chip companies that pay me to be a shareholder so these screens are quite helpful.

Want to Get Rich Slowly?

Of course you do.  Last but not least, this is one of my favourite financial authors:  William Bernstein.  Bernstein is a best-selling author and was a practicing neurologist.  Needless to say he is very bright and his books are witty and fun to read, yes, a financial book can be fun to read. Some time ago Bernstein released a short ebook targeted to Millennials entitled If You Can: How Millennials Can Get Rich Slowly. You can buy it of course but I’m all about free and inexpensive resources here so download it for free here.

So, there you have it.  A few of my favourite saving and investing resources for newbies.  Your financial future depends on you and with resources like this, you’ve got plenty of knowledge at the touch of your fingertips.  Thanks for reading.

Mark Seed is the founder, editor and owner of My Own Advisor. As my own financial advisor, I've grown our portfolio from $100,000 to well over $500,000. Our next big goal is to own a $1 million investment portfolio for an early retirement. Come follow my saving and investing journey by subscribing to my site. Enter your email address: Delivered by Subscribe to My Own Advisor by Email

18 Responses to "Saving and investing resources for newbies"

  1. Very good summary. i wish I had found this wealth of information at age 25 and not a few year back, at the age of 37.

    As you mention, you can start investing with any amount. even as from 1K. I fully agree with that. the one and only major prerequisite would be that you have some sort of emergency fund in place, or at least an ongoing plan to get one.

    Don’t over think it. So true. Simple and steady will win the race for most people. “only” having market returns will put you in the top 20pct of investors. Where can I sign?

    Reply
    1. Great comments. I think an emergency fund, whatever size that fits your risk tolerance, is a good thing.

      As for not over-thinking it, for sure, easy to say – hard to do! Preet’s book was well done and all new investors should read it.

      Reply
  2. Nice compilation (although I do have a problem with MoneySense as a whole, but not your specific selections).

    My submissions:

    ‘The Only Basic Financial Advice You’ll Ever Need’
    http://www.pragcap.com/the-only-basic-financial-advice-youll-ever-need/

    Munger. Munger. More Munger.

    And for the more enthusiastic beginner, give SSRN a whirl (Social Science Research Network) — http://papers.ssrn.com/sol3/DisplayJournalBrowse.cfm. Some awesome stuff on there (it has to be with Fama and Sharpe on the Board!). Over 550,000 research papers downloaded nearly 100,000,000 times…you had plans this summer? 😉

    Reply
      1. Always my pleasure.

        re: SSRN, it’s an awesome resource with a lot of high level, quality writing on an expansive range of topics. It’s a great source to continue learning, challenge your current thinking, or expand your world view. And 100% FREE!

        Reply
    1. Very true. The challenge I have with The Wealthy Barber, although a great story/narrative, is some of the facts are out of date. The investing principles are sound but the facts are not current.

      The Wealthy Barber Returns is an excellent book and I could have easily listed it.

      Reply
      1. Good points Mark. I was thinking the down to earth language in the book was excellent and easy to understand. All your suggestions are very good though —- thanks.

        Reply
    1. Their magazine is like the National Enquirer (or McDonalds) of personal finance — garbage which will do more harm than good.

      With headlines such as: “ALL-STAR STOCKS YOU *NEED* TO OWN NOW!” and “GET RICH NOW!” and “RETIRE RICH!” (emphasis theirs), their output plays to emotions and is in direct opposition to the mounds of research and data which outlines actions the average investor can take to be successful (e.g. save more, index more, pay less fees).

      Anecdotally, I was gifted their ‘Top 200 Best Stocks for 2015’ magazine last year. Their #1 pick…Valeant.

      Reply
      1. Thanks for coming back to reply. Agreed about their headline “clickbait” – all magazines do that.

        I struggled with them a decade a go when their recommended mutual funds list never matched one year to the next. At least their ETF all-stars can be seen consistently. More recently I’ve struggle with whether to believe/follow their recommendations for ETF passive investing vs. individual stocks (Best Stocks to Retire on vs. All-Star Stocks). I’d sorta like them to make up their minds but I guess that wouldn’t sell too many magazines.

        Reply
        1. I don’t deny there is some level of “financial porn” in MoneySense – they are after all trying to sell magazines and subscriptions. That said, I do believe there are some good stories, case studies and articles in MoneySense to learn from.

          In the end, don’t take everything you read is gospel – that goes for most things!

          Reply
        2. @BB Strongly suggest one avoid recommendations from magazines. The articles are written months ahead or refer to prior year performance. Often the best past performance becomes the worst next year.
          Develop your own strategy, research, read and then stick with long-term investments.

          Reply
  3. I was curious to see how 15% of Net pay would affect the average person:

    Gross Net 15% Cash
    $1,061 $715 $107 $608
    $1,200 $1,021 $153 $868
    $2,800 $2,035 $305 $1,730
    $3,420 $2,152 $323 $1,829
    $5,000 $3,475 $521 $2,954

    Gross of $1,000 to $3,000 means saving between $100 to $300 a month.

    Reply
  4. Sorry I used Bi-Weekly calculations so one has double the amount above. Earnings of $2,000 to $6,000 one should put aside $200 to $600 a month. 15% of Net is approx 10% of Gross.

    Reply

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