Pattie Lovett-Reid: Canadians slow to embrace DIY investing
Direct or “do-it-yourself” (DIY) investing has been around for decades, but that doesn’t mean the concept has been embraced.
A new survey by TD Bank has revealed 41 per cent of Canadians don’t have any idea of where to start. The majority (58 per cent) don’t know the difference between a mutual fund and an exchange-traded fund. And to make matters worse, 38 per cent don’t know the difference between a stock and a bond.
These numbers are dismal, so not surprisingly, only six per cent identified themselves as “rock star” investors.
Here’s some more of TD’s findings:
- 55 per cent don’t know how to do a trade online
- 25 per cent don’t believe investing small amounts will bring you benefits
- 39 per cent don’t know where to find free educational resources to help them with investing
When it comes to investing, there are risks and there are excuses. Both are detrimental to your wealth creation.
The biggest risk for you as an investor is not knowing what you are doing, or believing in your own predictive power. You might have gotten an investment right the first time – beginner’s luck – but the odds of winging it and getting it right twice are slim. Investing is about doing your homework, starting with small amounts of money, following the facts and not letting your emotions get in the way, while appreciating that even the pros can get it wrong. So be realistic about your expectations.
And while lack of knowledge is dangerous, equally so is procrastination and sitting in cash while letting taxes and inflation erode your wealth.
Increasing your knowledge can help reduce the fear of the unknown. You owe it to yourself to make your money work as hard for you as you work for it – and that requires a little homework.