Weekend Reading – The most common investing mistakes

Weekend Reading – The most common investing mistakes

Hello!

Welcome to a fresh Weekend Reading, highlighting the most common investing mistakes.

Before that, including sharing some of my own investing failures…some reminders:

Last weekend I asked if you would rather have more money, now (to combat inflation) or more pension later on? I know my answer!

Weekend Reading – More money or more pension?

And…I shared what I believe are some great, modest-cost ETFs to own to capture our Canadian energy sector (while sharing a few energy stocks I own as well).

Top Canadian Energy ETFs and Stocks

Weekend Reading – The most common investing mistakes

Ya, mistakes can and do happen. It’s part of life. We’re not perfect. I’m hardly perfect. 

But I do try and learn from things…investing included. I’ve also tried to simplify my investing approach with time too. 

I shared some of my personal finance mistakes a few years ago, so you don’t repeat what I did!?

Some of my best personal finance advice – so you don’t have to make the same mistakes I did!

Headlining this Weekend Reading, I enjoyed what Visual Capitalist put together in this chart:

20-common-investing-mistakes - Visual Capitalist November 2023

Have you made or done any of these??

Guilty as charged in some cases here!

More Weekend Reading…

There is no shortage of bad financial advice. The folks at MoneySense shared their worst money advice list, only 50 items!

This former financial fraudster (made famous by Leonardo DiCaprio) is now promoting index funds. So, get this, The original Wolf of Wall Street loves indexing now.

Jordan Belfort: I think it is ironical. I resisted writing about Wall Street and how to make money in the stock market the right way for many, many years. And ultimately, I just got to a point where, after being on the speaking circuit and teaching mostly entrepreneurship and sales, I realized there is a need to discuss things like: What is the actual way to make money in the stock market — the right way, and without the nonsense of short-term trading and trying to time the market?

Yup. Avoid short-term trading. Also see 4, 5, 6, 12, 14, etc. from the Visual Capitalist list above. 

Martin Pelletier, CFA, a senior portfolio manager at Wellington-Altus Private Counsel Inc., is somewhat concerned about the boring 60/40 investor these days. I personally have a much higher bias to stocks than just 60% in our portfolio and likely always will.

“The longer this inflationary, low-growth and uncertain geopolitical environment continues, the more this will hurt 60/40 investors who depend on the opposite to make money and the greater the likelihood they will withdraw even more money from the markets.” – Source.

Preet Banerjee is tired of hidden fees and surcharges (subscription). Hard to disagree here…

“It’s really not that complicated. If I’m looking to buy concert tickets, the first price I want to see is what I’m paying, plus tax. If you need to charge more for ticket delivery, a facility fee, a convenience fee, just put it in the headline price. When a company advertises a “total price,” that, plus sales tax, should be it, unless I want optional extras.”

Finally, some wise words to share from Christine Benz at Morningstar when it comes to retirement spending or planning for your retirement spending – focus on flexible withdrawal strategies. From Chrisitine:

But the more I know about in-retirement spending, the more I think that most people should embrace flexible withdrawal strategies that ebb and flow with a portfolio’s balance, the better to withdraw more of their portfolios during their own lifetimes rather than leave behind big balances after death. Most such approaches encourage belt-tightening after portfolio losses and allow for “raises” after good market years. As financial planner and researcher Jonathan Guyton pointed out to me, that’s a rare strategy that both makes sense from an investment and financial planning standpoint and lines up with what feels right psychologically.”

One such strategy I continue to highlight relates to VPW – read more here what that means, including a free tool to use along with a short case study from a savvy reader who follows this very approach year-after-year.

Save, Invest, Prosper!

As always, check my Deals page – partnerships and discounts to help you make the most out of your money – some of them you can’t find anywhere else!

Check out my partnerships with:

  • Dividend Stocks Rock (including my deep lifetime discount from Mike!)
  • 5i Research
  • StockTrades.ca
  • LegalWills
  • Borrowell 
  • and more!

As always, you can also consider reaching out here for some low-cost financial projections services – anytime.

Cashflows & Portfolios

With my partner on that site, we use professional financial software to deliver customized, personal reports to you whenever you want. 

In fact, there are now two (2) low-cost services to choose from:

  • Done-For-You – we do the work and data entry, and provide your reports OR 
  • DIY – whereby you do all the work, you do your own data entries, and you get your own results in the software – we essentially open up some professional financial software for you to use to be your own retirement income planner!

Just reach out if you have any questions, anytime…

I launched this service with my DIY investor good friend – a service founded by DIY investors for DIY investors without the conflict of any advice.

Enjoy your weekend. 🙂

Mark

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

16 Responses to "Weekend Reading – The most common investing mistakes"

  1. Hi Mark – some of the comments above touch on my latest question; I’m afraid of making mistakes looking AHEAD! A few years ago, after we retired, I did my research and invested appropriately and well. Since then we’ve had some new sources of income, and are expecting a moderately substantial inheritance. Q1 – where was all this largesse when we were struggling to save for a house about 1 million years ago! Q2, and the serious one, how to overcome “investment inertia”? I’m feeling kind of stuck – made good choices in the past, but with a substantial amount to invest, we’re not really sure what to do. I realize i could “double down” on some of our past choices and buy more of the same. But lots of those good buys a few years ago are trading at their historical maximums. I also can’t believe I can reproduce those initial smart buys – beginners luck maybe? We have no debt, TFSAs are (always) maxed out, dividend investors, Questrade self-managed.
    You see? Excuses for not making investment decisions! I’m stuck.
    Any suggestions for breaking out of the rut and getting going again?

    Reply
    1. Hi William, a large inheritance is a good problem to have for sure but it does come with risks. I can answer your question on what I might do – also assuming no need to invest in an RRSP as well:

      1. With any large inheritance, I would likely look at my near-term spending needs (1-2 years) and make sure I have enough cash/cash equivalents for that.
      2. Beyond #1, assuming TFSAs are maxed and could be for the coming years, I would likely invest in a taxable account for growth. Sure, some dividend payers are fine but lower-yielding, higher growth stocks or ETFs are likely to offer good long-term returns AND lower taxation in a taxable account.
      3. When in doubt, I could consider owning broad, diversified ETFs to reduce any individual stock risk. You can own a world of stocks in just one fund these days.

      I hope those thoughts are helpful!
      Mark

      Reply
  2. Hi Mark,
    I have a question regarding Stock Research Platforms that have fee based subscriptions. I noticed you have 5i Research listed on your deals page, which I have been a member of for quite some time. I was curious if you know any other stock research platforms that focus on Canadian and US Stocks that you feel would be worthy of mention?
    Thank you,
    Kevin

    Reply
    1. Thanks, Kevin. I’ve known the folks including Peter at 5i for a long time. I continue to have a partnership with them because of their non-biased approach.

      As for other stock research platforms, from a DIY perspective, I have a partnership with Mike at DSR and the guys at Stocktrades as well. Both services have value depending on what you are looking for, since they approach things differently. They are doing their best to put in some work as part of their research so others don’t have to if they don’t want to. 🙂

      https://www.myownadvisor.ca/deals/

      Email or ping me if more questions, happy to answer!
      Mark

      Reply
  3. Hello Mark; I used the opportunity this weekend to think more carefully about your summary information on ” Common Mistakes”. I realized that over the years, I have unconciously committed many of these unfortunate missteps . As our journey continued on, many of these errors were assimilated into positive, better steps and behaviours. Life, to me, is a series of experiences that we are able to use for our benefit if we continue to learn and grow in positive, constructive ways as we go about our business. I appreciate your work, take care. Mike

    Reply
  4. Oh I’ve had my “mistakes” if you will … buying Metro right at the bottom of the credit crisis in 2009 was brilliant. Selling it a couple of years later because the price “wasn’t going anywhere” was dumb. However overall because of when I entered the market having sold all my mutual funds for a $100,000 loss in early 2009 and using the proceeds to buy dividend growth stocks ended very very well for me. The losses were great in the long run as I used them against capital gains. I’m very retired at 71 with a 6 digit income primarily made up of tax advantaged dividends. Our TFSAs have grown substantially and I keep reinvesting the proceeds back into stocks. Best income yield in there is BNS at over 7% which I keep buying … already have enough benefit from tax advantaged dividends in my non registered account. If I wanted the combined wife and I income would be tax free $27,000 but until then we just keep reinvesting … a gift from Harper and Garth Turner! I waited until 70 to collect OAS at a 36% premium and although getting clawed back the rest will pay the taxes as my cash account interest is huge for 2023. I’m quite happy to sit in 20 – 25% cash at 5% (CDN) and 5.15% (US) as really we have enough and it’s nice to have a backup plan. I don’t believe in bonds but Perpetual Preferreds from A class companies like Great West Lifeco or Power Financial – the common stock may be delisted but the Perpetual are still out there – are yielding 7%. By the way if you have a trading account at Scotiabank anyone can get the same cash interest as myself for any amount. No commission, no management fee – what you see is what you will get in your hand minus what you send to Ottawa during tax time. DYN6004 for CDN and DYN6005 for US … under the mutual fund tab but it’s not a mutual fund. You won’t find many at Scotia who will tell you about this.

    Reply
    1. Hi Barry,

      I have no doubt a shift towards buying dividend growth stocks has “ended very very well” for you.

      Noboby really wants you to invest this way since the only folks that get wealthy eventually are the DIY investors.

      Many members/clients I support at Cashflows & Portfolios do try and wait until age 70 for CPP, once they see the income boost (and taxation impacts) in not starting the RRSP/RRIF withdrawals sooner. Some, to your point, delay OAS to age 70 as well since they simply don’t need the income/income stability yet.

      Interesting on the preferreds – I don’t own any – but I can see the appeal for the yield.

      Thanks very your detailed comments!
      Mark

      Reply
      1. Re Barry’s comment above… what you see is what you will get in your hand minus what you send to Ottawa during tax time. DYN6004 for CDN and DYN6005 for US … under the mutual fund tab but it’s not a mutual fund. You won’t find many at Scotia who will tell you about this.

        I looked for this, DYN6004, can you explain more please?

        Reply
        1. Thanks, Sandra.

          I don’t own DYN6004 or DYN6005 so really can’t speak to it too much. 🙂

          I believe, can’t say for sure, that Barry is referring to Scotiabank Investment Savings Account fund product? (DYN6000) in that Scotia may not actively promote this product / or these products re: “won’t find many at Scotia who will tell you about this…” There may or may not be trailer fees with some mutual funds however. Best to talk to the provider about any fund details before you buy.

          Hope that helps!?
          Mark

          Reply
  5. (RBull) deane hennigar · Edit

    Could write a book on my mistakes but overall made good enough choices to be happily and comfortably retired by my 55th. Going on 10 years later life is still very good. Probably better than expected. Lucky.

    Thanks Mark!

    Reply
  6. Hello Mark Yes, looking back mistakes do happen.Thinking about that, my biggest “mistake” has been selling really good quality stocks too soon. For example, we initially bought MSFT at a great price years ago. I sold our holding in three tranches as the stock rose substantially , finally exiting the position at $165. A better plan would have been to hold a portion going forward. The consolation was I was able to purchase some better income/ dividend paying equities. A number of other positions have been held for decades , so I see things balancing out over long time periods. It is important to realize where we are able to make improvements in our investment process and make well considered adjustments. I have very few regrets.Regards Mike

    Reply
    1. Ya, I held MSFT years ago too…ah well.

      I’m getting too old to choose many new stocks. I figure the ones I have are pretty good, a mix of dividend payers/growers and some for price appreciation too (e.g., WMT, WM) from the U.S. so I’m just likely to add more $$ to low-cost ETFs from here on out including 2024 TFSA contribution room. Will continue to run a few DRIPs too. 🙂

      Mark

      Reply

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