Robert Gibb is a Victoria-based Dividend Reinvestment Plan (DRIP) investor who has been investing in dividend paying stocks for years. My Own Advisor recently contacted this seasoned do-it-yourself (DIY) investor to answer a few questions about investing in stocks, his thoughts on Canada’s real estate market and what advice he has for young Canadians.
My Own Advisor – thanks for taking the time to answer a few questions Robert. So, let’s start from the beginning….how did you become a do-it-yourself (DIY) investor?
Up until my 40’s I knew nothing about how money worked. My parents grew up in the depression, never discussed money with their children and my sense growing up was the stock market was something to be feared. Prior to this I’d been in a motorcycle crash and ended up on disability. An insurance salesman friend told me I needed to save every cent possible. I dove into the library and read everything possible on money, especially about mutual funds. I thought I knew it all. Every once in awhile I’d come across references to dividend reinvestment plans and ultimately Cemil Otar’s “Commission Free Investing.”
The idea of investing small amounts of cash commission free and income averaging seemed ideal to my situation. I mentioned this to my parents. I was absolutely shocked to discover that my parents had multiple brokerage accounts, so, they transferred 10 shares each of TELUS and Enbridge to me to get started in the company Dividend Reinvestment Plans (DRIPs).
My Own Advisor – why are you so fond of dividend paying stocks?
I’m not so much fond of dividend paying stocks as being a poor analyst of companies and their prospects and someone with limited means being on disability. Simple is best.
Although nothing is certain, companies like Bank of Montreal (BMO) or Coca-Cola can be expected to be around for years to come. That they offer a low cost way to take part in growth through a DRIP was more important to the situation I was in.
My Own Advisor – what’s your take on indexing?
Slow and steady wins the race but DRIPping can accomplish the same thing with direct ownership.
My Own Advisor – what’s your take on bonds?
My wife sleeps at night (chuckle). Personally, if not for bonds and a pension, I’d have favoured stocks even more than I did. The thinking being that if all went to hell in a hand basket I’d be no worse off than I am now. On the other hand, the upside potential would be greater.
My Own Advisor – what’s your take on the real estate market in Canada?
Other than owning your own home the best time to buy real estate as an investment is when interest rates are falling.
My Own Advisor – what are your favourite personal finance and investing books or resources?
Canadian MoneySaver Magazine, MoneySense, Books by Charles Carlson and George Fisher (All About DRIPs and DSPs) and anything written by Norm Rothery and Dave Stanley.
My Own Advisor – what are your biggest financial or investing mistakes?
Being talked into an investment by my broker when I was just starting out, into buying a mutual fund that was up 110% the year before. I have a statistical background – I knew this was wrong but I did it anyway. I lost almost 70% the next year. Ultimately, it was a blessing as it motivated me to become a DIY investor.
My Own Advisor – have you learned more from your mistakes or successes?
Well, the example above was a big lesson! I think the thing is, to learn from both so you can develop a methodology that works for you and then be disciplined with that approach.
My Own Advisor – what’s your investment plan for the next 5 years? 10 years?
Continue to invest in DRIPs, especially those with increasing dividends and ultimately use the dividends to some salary in retirement.
My Own Advisor – what advice would you give to 20- and 30-somethings who want to invest today?
Read, read, read. DRIPs aren’t sexy but don’t throw all your money at the next big thing. Give yourself a base of good DRIPs or Index Funds to fall back on.
Oh, and one more thing, Google: “Grace Groner Wake Forest College”.
Thanks again to Robert Gibb for making the time to answer a few questions. Personally, I find these interviews helpful since they tend to reinforce where I’m going with my investment plan but also allow me to make a few tweaks to my plan based on what I learn from seasoned investors like Robert. I find the experiences and lessons learned of other successful DIY investors, extremely valuable. I hope the same applies for you.
Robert frequently offers his expertise to The Globe and Mail and is a moderator for all things related to DRIPping Canadian stocks on The DRIP Investing Resource Centre. In that Resource Centre and on a few other investing and community forums, you’ll know him by the handle “OperaBob”.
Got a comment for me? Got a comment for Robert? Comment away!