What Investing Advice do you Give Others?

First of all I only pass on what I've learned to others when they ask me. It doesn't happen too often. I never preach to anyone ever.

Most people never talk about money or are interested in sharing their inner most money woes.

They just buy what the bank is selling or keep their money in brain dead GICs or savings accounts.

One thing I've never bought is a GIC.

You will find they like to buy mutual funds, ETFs and bond funds and their pref share proxies. Why?

Easy is why. They have been sold a product and not really went out and bought anything. That's a big difference. Knowing exactly what you're buying is the most important aspect of investing money.

I have a lot of friends who just own bank mutual funds. They bank there so they are repeat customers for all kinds of other products. They would never think to buy the bank's stock. That's what I do.

I bank at Scotiabank and use Scotia iTrade to buy stocks.

That is the first thing I recommend, open an investing account where you bank and once opened, buy shares in the bank itself. Why not? If you have faith enough to bank there, you might as well own a piece of the business.

Don't Buy the Canadian Market

Too many resource and oil companies making it full of bad companies you don't want to own. I stick to banks, utilities, telecomms, pipelines and rail stocks. Strip away your holdings to just these areas and you have the best part of the Canadian market.

Ya but it's easier to just buy a fund or an ETF so I get everything right?

True but you pay an ongoing fee for that privilege. Why pay anyone anything at anytime? You just pay a small trading fee to buy your bank stock and then sit back and do nothing. You're invested.

That's all I do.

Stick to quality established dividend growth companies. They all pay you money on a monthly or quarterly basis to own them. NOT the other way around. I find comfort in knowing that no company is slowly bleeding away my retirement account with management fees.

Buy What You Use Every Day

It's not a new concept but it's a nice place to start.

If you get bored with just banks and utilities start looking around where you spend money and what you spend it on and make a list of those businesses to study for a possible investment.

What's good for me is not necessarily good for you. 

I call this the retail investor's hedging strategy. You invest where you spend your money.

Do you line up at Tim Horton's or McDonald's for your daily coffee fix? Why not buy QSR or MCD stock? Will they go out of business?

Do you shop at Dollarama, WalMart or get lotto tickets at Circle K?

Good investments? Maybe, but do some homework and decide if you want to become an owner. I love this idea more than I would love buying an ETF or bonds.

Use a Visa or Mastercard to pay for purchases. Ever thought of buying shares in either company? Hmmm, could be good.

I shop a lot at Costco. I own Costco stock because I love the business and they make money.

Look at what the kids are using as another place for investment. Most have iphones, watch youtube and have Instagram and Facebook accounts.

Should you buy AAPL, FB and GOOG stock? I don't know but it seems like the place to be. At my stage in life I don't invest in growth stocks as I need the income, but these are great places to look to add money if you have a lot of time.

Do you use Nat Gas to heat your house? I pay Enbridge a monthly bill to deliver it to my furnace. Yes, I own shares in the company as a hedge to my yearly expenses. I love this concept.

Go through your house and define what day to day items you use the most and where you spend your money. Do some homework and make a buying decision based on these products.

What I Don't Do

Rebalance!

Warren Buffett doesn't believe in it and that's good enough for me. He buys good companies and rarely sells. They are hard to find so when you do why sell them? His partner Charlie Munger refers to the whole concept as twaddle.

Everything bank salespeople and advisors preach to you is twaddle. Learn to DIY, do it yourself.

Say NO to mutual funds, ETFs, bonds and preferred shares.

Say NO to anything described in MPT (Modern Portfolio Theory).

Don't buy the next big thing. Talking here like Pot stocks that don't pay dividends or make money.

Don't buy what you don't understand.

Don't sell your quality stocks. The safety is in the holding and NOT diversifying into bonds. 

Ignore asset allocation - more twaddle!

My Final Take

"receiving steady cash flow that grows over time is one of the best ways to build your wealth and stay calm during market downturns"
- John Heinzl, Globe and Mail.

The biggest enemy is YOU!

Don't get emotional and sell out too soon.

Go subscribe to dividendgrowth.ca and read Tom Connolly.

STOP consuming too much financial information and stick to your own plan. At least you have one.

Become an income investor, collect the dividends and buy when the markets are priced reasonably. Right now markets are at new highs. (expensive).

Keep focused on investing for INCOME GROWTH!

What advice do you give newbie investors?