Investing........It's complicated.
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  1. #1
    Senior Member sags's Avatar
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    Investing........It's complicated.

    As I peruse some of the threads, it strengthens my belief that investing is far too complicated for most people.

    Not only are there a myriad of decisions on investments, there are also the tax and legal complications involved in each decision.

    Reading the discussions among knowledgeable people in the threads, there are differences of opinion among them.

    Small wonder so many people buy mutual funds and pay high fees or hold their money in a GIC/HISA in a TFSA.

    Replacing DB pensions with their automatic "no thought required" contributions and benefits, with a complicated array of considerations was a proposition destined for failure, and given the lack of retirement savings among Canadians.........it has done just that.

    Keeping life simple is good, but someone always comes along with a better idea and screws it all up.
    Last edited by sags; 2017-01-10 at 08:40 AM.
    Someone planted a tree a long time ago so I can sit in the shade.

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    Quote Originally Posted by sags View Post
    Small wonder so many people buy mutual funds and pay high fees or hold their money in a GIC/HISA in a TFSA.
    Sags, it's because people are sheep. Sheep do what they're told.

    People buy 5h1++y mutual funds because that's what they're told to buy. B-a-a-a-a-a-h.

    Investing is complicated, sure, but so is building a deck. But millions do it - they'll go online, ask questions, read up, learn how, roll up their sleeves and just do it.

    Investing can be done if people are motivated and put forth the effort

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    Personally I don't think investing is complicated, I hunk it's work and people, by their very nature, are lazy. We're also in a society that wants instant gratification...investing is slow and boring.

    There are plenty of fairly proven investment techniques that are simple (couch potato, contrarian, every magazine's top picks, etc.). Yet the majority can't even be bothered to do that.

    On the other hand, how many non-investors jumped in on the "hot tip" fads of the past (Nortel, worldcom, Enron, breX, etc.) when they were making daily headlines and then later got burned? Later saying how investing was only for fools and complaining about how hard it is to make money...

    To me, investing is first learning about yourself, finding your "investment personality". What kind of investing are you naturally inclined to be? For some its day trading, for others it may be buy and hold. One thing for sure, a buy and hold personality makes a lousy day trader and vice versa. You can't just copy someone else if it goes against your nature.

    The next step is to actually do a little work and learn how to pick investments. That involves knowing what you are buying, reading the labels at it were... most people don't do that with food, so why expect them to do it with investments?

    You don't need to be an accountant to read a balance sheet, you don't need to be an engineer or mathematician to calculate if something is cash flow positive...

    A 50k mortgage costs on a bachelor suite condo is nearly $300/month at 3%, if the condo fees are $300, the property taxes $75, insurance is $25 and you throw in $200 for repairs you need to rent it for $900/month, every month, just to break even. If interest rates or any other costs go up, you need to make more...the math isn't complicated, nor does it lie.

    That being said, you need to do dome work and actually read a lot. It's called an education, and most people hated school to begin with, so they don't want to do it now. It's usually not hard to "pick the winners", everyone knows Apple is one of the world's most valuable companies for example...the trick is figuring out if it's worth the price people are asking for it today, or have people run up the price to where you'll likely never be able to make money yourself (hint, if it's popular, it's likely to be overpriced in today's market).

    Best to read some "classic" investment books, ones that have stood the test of time and talk about buying in a market where interest rates were much higher. There you learn how people made money when money wasn't cheap...rules like don't buy a company with more than 10x a price to book value...the "new reality" books published today may work when times are good, and people are jumping on the bandwagon (you could have made a killing with Enron, worldcom, breX, Norter, etc. If you were lucky and got out before the house of cards fell, but timing a market is hard and that didn't make them good investments).

    Investing is about steady, consistant returns. It's about not having to watch constantly...it's boring, it's work.

    That's what makes it hard.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

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    JaG gives really goods notions and I do agree. People make it complicated.

    Personally I see people focused so much on investing regardless of the amount of their war chest and its what causes them to think its so overly complicated.

    Anyone starting out should be focused on building their war chest. There are simple low fee ETFS that help them participate in the market with these funds until they are at the point where they either have more time to learn, or, pay somebody else to help them out. Everyone wants to find the pot of gold but nobody wants to do the work in finding it.

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    Sometimes that hardest part of investing is not investing. Real estate right now is a prime example...

    I just looked at a bachelor suite which was priced at $70k...pretty good deal in this market but, as you can see by the numbers above for a $50k place, they just don't work. Yet, I know hundreds of "investors" who'd jump at the chance to own a Pacheco for $70k, most are priced even higher...and people are buying them.

    When the correction occurs, and it always does, these "investors" lose their shirt and then preach to anyone who'll listen about the dangers of investing.

    Don't get me wrong, I'd love to buy as much as anyone else, what makes me an investir is knowing when to buy and when not to buy. Of course, the correction may not come for years, making the $70k bachelor suite a "good" investment, but that's more luck than anything else and investing isn't about luck.
    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

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    Quote Originally Posted by Just a Guy View Post
    Sometimes that hardest part of investing is not investing. Real estate right now is a prime example...

    I just looked at a bachelor suite which was priced at $70k...pretty good deal in this market but, as you can see by the numbers above for a $50k place, they just don't work. Yet, I know hundreds of "investors" who'd jump at the chance to own a Pacheco for $70k, most are priced even higher...and people are buying them.

    When the correction occurs, and it always does, these "investors" lose their shirt and then preach to anyone who'll listen about the dangers of investing.

    Don't get me wrong, I'd love to buy as much as anyone else, what makes me an investir is knowing when to buy and when not to buy. Of course, the correction may not come for years, making the $70k bachelor suite a "good" investment, but that's more luck than anything else and investing isn't about luck.
    JAG - I'm curious...where is this bachelor suite? what market? and...what the heck is a Pacheco???

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    Quote Originally Posted by sags View Post
    As I peruse some of the threads, it strengthens my belief that investing is far too complicated for most people.
    Not only are there a myriad of decisions on investments, there are also the tax and legal complications involved in each decision ...
    When looking at it as a whole, without learning anything ... sure. It is no different than someone deciding to start by building a house from scratch or rebuilding a car engine versus starting small and building one's skills/knowledge.

    Where one figures out one has reached their limit ... that's fine but I don't see the point of looking at investing as a whole to decide it's "too much".


    Quote Originally Posted by sags View Post
    Reading the discussions among knowledgeable people in the threads, there are differences of opinion among them.
    Not sure why that's a problem ... there are many different ways to make money where a lot of people have a bias (i.e. they get paid better) for one particular way or they want everyone to follow the same way.


    Quote Originally Posted by sags View Post
    Small wonder so many people buy mutual funds and pay high fees or hold their money in a GIC/HISA in a TFSA.
    Of those I talked to ... most do so because they are intimidated or have made the decision to avoid learning. Those who learn tend to branch out.


    Quote Originally Posted by sags View Post
    Replacing DB pensions with their automatic "no thought required" contributions and benefits, with a complicated array of considerations was a proposition destined for failure, and given the lack of retirement savings among Canadians.........it has done just that.

    Keeping life simple is good, but someone always comes along with a better idea and screws it all up.
    AFACIT ... the selling point for dropping DB pensions to go with investor driven decisions have nothing to do with "better idea". Well maybe "better idea" for benefiting the employer. Though with Saskatchewan being one of the early adopters who according to experts, has not seen a cost reduction yet - the employer's unless they didn't have a DB pension, are only getting a small slice of the benefit with a long way to go.


    Cheers

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