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INVESTING 101
3/29/2017 6:53:15 PM
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Opinions expressed in articles published on this site are solely those of the contributing authors and do not necessarily represent the views or opinions of The Fund Library, its staff or affiliates.

 

By Robyn K. Thompson | Friday, September 30, 2016

Q – I’m a recent graduate, and I’m just getting started in my career with a new employer. My employer offers a group RRSP as a benefit, but I’m a little nervous because the managers of the plan may invest in stocks and preferred shares that traded on stock markets. The RRSP is a government-registered plan, so I’m wondering whether my RRSP contributions would therefore be insured or protected against losses in the stock market. – Fiona L., Mississauga, Ontario

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By Robyn K. Thompson | Friday, September 23, 2016

Q – I like the idea of exchange-traded funds because their MERs are lower than mutual funds. But I’m a little unclear as to how their share prices are determined or how they manage to stay in business – some ETF MERs are scarcely above zero. Also, how do closed-end funds figure into this mix? – Brad M., Kanata, Ontario

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By Robyn K. Thompson | Friday, September 16, 2016

Q – We’re expecting our first child next May, and I expect to take maternity leave of 12 months (maybe more if the Liberal government follows through on their election promise to extend it to 18 months). I’m currently working full time, and have for a few years, so I’m wondering what we can do to prepare financially, and what kinds of benefits might be available to help ease the financial burden. – Terry M., Halifax, Nova Scotia

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By Robyn K. Thompson | Friday, February 19, 2016

Q – Over the past month or so, the price of gold has climbed steadily, gaining nearly US$150 per ounce, to around a recent US$1,240 per ounce. This is the biggest sustained gain in the past 12 months. I’m wondering if this is a sign that investors are once again worried about the state of global finances, especially banks, and whether it would make sense to shift a portion of my asset allocation to gold. If so, with all the vehicles now available, which would be the best way to invest? – Marnie D., Calgary, Alberta

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By Robyn K. Thompson | Friday, July 10, 2015

Q – I have a portfolio of stocks and some bond funds for fixed-income exposure, in a split of about 60% stocks and 40% bonds. I can calculate my annual portfolio performance using my advisor’s account statements. But it just doesn’t seem to hold up when compared to the S&P/TSX Composite Index. I’ve been told that I’m using the wrong benchmark as a comparison. I thought stock indices like the S&P/TSX Composite or the S&P 500 Composite were pretty standard. Am I wrong? – Jon B., London, Ontario

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By Patrick McKeough | Monday, June 08, 2015




Many investors acquire the habit of focusing on stocks that have an attractive reading on a single investment measure. The price-earnings ratio is a good case in point. But that one measure might disguise problems that could make the stock a disaster-in-waiting.

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By Robyn K. Thompson | Friday, June 05, 2015
 

Q – I’ve been hearing a lot about active and passive approaches to investment management. I’m not really sure what all this means. Can you shed some light? – Ric B., Barrie, Ontario

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By Robyn K. Thompson | Friday, May 29, 2015

Q – I’ve just graduated from University, and I have a student loan. Some of my friends are thinking of taking a year off to travel. Some have said they intend to simply ignore their student loans because the government will eventually forgive it anyway. I’m not sure this is a good idea. Do you have any financial advice for new graduates? – Molly E., Toronto, Ontario

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By Dave Paterson | Wednesday, May 13, 2015



I am often asked why I recommend one fund over the other, or why someone’s favorite fund is not one of mine. There are a number of reasons – the fund may be too new, for example, and I may not have enough familiarity with it to make an assessment. In most cases, though, I find that after a more detailed review, I simply don’t think a fund’s past performance is repeatable. So what goes into such a review? I start with six key quantitative factors.

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By Patrick McKeough | Monday, May 11, 2015




Timing the market depends on too many random elements and inevitably leads to losses, so successful investors learn to avoid it and invest steadily over a period of years. The practice of market timing consists of coming up with and acting on a series of guesses (or estimates, or assessments of the probabilities) to use in your buying and selling decisions, with the aim of buying near a low and selling near a high. Most market timing systems attempt to interpret and detect buy and sell signals in trading patterns and history. Some of the decisions you make with the help of market timing will bring you profits, and others will cost you money.

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By Robyn K. Thompson | Friday, May 01, 2015

Q – I recently came into some money through an inheritance, and I’ve been looking at mutual funds, because I’ve been told these offer the most investment diversification. But I’m finding the assortment of fund series – everything from A to I and beyond – baffling, and I’m totally flummoxed by the hodge-podge of sales charges and commissions. Can you sort this out for me? – Stan B., Belleville, Ontario

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By Dave Paterson | Thursday, April 30, 2015



Bond duration is a useful investment metric that can tell you a lot about the interest-rate sensitivity (volatility) of a fixed-income investment. (See my recent article on this.) But duration is more than just another pretty number. It’s actually a very useful tool to help you manage your fixed-income portfolio and optimize performance. Here’s how.

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By Patrick McKeough | Monday, April 27, 2015



If you feel an urge to sell a stock because it has been performing well for a few years, lie down till the urge goes away. If you give in to it, you may deprive yourself of even bigger gains in the future.

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By Patrick McKeough | Monday, March 16, 2015



Investor shorthand can provide a useful guide to investment information, but it can also oversimplify analysis and events and steer investors into bad decisions. Investor shorthand can help you think about and talk about large blocks of investment information. But it may also lead you to make associations and come to conclusions that can cost you money. Here’s how to avoid this common investment mistake.

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By Patrick McKeough | Monday, August 04, 2014



Every industry and group has its own special jargon. This specialized language always has the same purpose. It simplifies communications within the industry, and helps make insiders feel they are part of a tightly-knit community. It also helps the group pursue its goals. It shapes concepts that will establish lines of thought and discussions that match the industry’s view of the world. But it can be confusing for those who are not insiders in the group.

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By Dave Paterson | Wednesday, July 09, 2014

Asset allocation really is the bedrock to building a great portfolio. At the core, asset allocation is defined as the way you divide up the investments in your portfolio. It’s an often-neglected aspect of portfolio management among self-directed investors, but it can play a crucial role in everything from risk management to long-term portfolio performance. Here’s why.

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By Robyn K. Thompson | Friday, May 23, 2014

Q – As a new retiree, I’ve been looking for ways to secure a regular income stream. I spoke with a financial planner at my local bank, and she suggested putting some of my non-registered investments into one of the bank’s “T6-series” mutual fund, which pays out a 6% annualized distribution, paid monthly, which she says is “tax efficient.” She mentioned “return of capital” and “tax-free switching” among other things. But I’m not quite sure how this works. Can you explain? – Fred R., Scarborough, Ontario

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By Robyn K. Thompson | Friday, May 02, 2014

Q – Do you recommend using leverage when investing in the stock market? Interest rates continue to be low, money is cheap, and stock markets keep going up. Should I borrow to invest now? – George H., Midland, Ontario

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By Robyn K. Thompson | Friday, February 14, 2014

Q – I sold my equity fund and switched to a bond fund in January, because the unit value had dropped quite a bit, and I read everywhere that the stock market was entering a prolonged correction. To my complete surprise, markets have recovered this month, and I now have no equity allocation. I’d have to buy back into my equity fund at a much higher price than I got when I sold it. Do you have any advice on how to avoid this kind of a trap? – Francis T., Winnipeg, Manitoba

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By Patrick McKeough | Monday, November 11, 2013

There are lots of references in the financial media to “shorts”– those seeking to profit from stocks that fall in price. But this strategy comes with considerable risk. When you decide to sell a stock short, you borrow that stock from a broker and then sell it. But you eventually have to buy the stock back on the market in order to return it to its owner. There are three big disadvantages to the short-selling strategy.

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