# Investing........It's complicated.



## sags (May 15, 2010)

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.


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## dotnet_nerd (Jul 1, 2009)

sags said:


> 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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## Just a Guy (Mar 27, 2012)

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.


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## redsgomarching (Mar 6, 2016)

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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## Just a Guy (Mar 27, 2012)

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.


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## jargey3000 (Jan 25, 2011)

Just a Guy said:


> 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.
> 
> ...


JAG - I'm curious...where is this bachelor suite? what market? and...what the heck is a Pacheco???


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## Just a Guy (Mar 27, 2012)

Pacheco is an autocorrect for bachelor for some reason. It was a private offer I stumbled across.


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## none (Jan 15, 2013)

It's more people being arrogant with a good dose of stupidity (a dangerous combination (see Trump & global warming threads for further examples).

Having an EXTREMELY effective portfolio is dead simple. * Buy 3 ETFs in age dependent ratios. Save more than you spend. DONE.* That's it. SUPER SIMPLE.

It's when people take this 95% optimized portfolio and try to get it to 100% (which may actually be impossible) and start doing stupid crap b/c they think they know things that they really don't is when things go side ways.

http://canadiancouchpotato.com/2016/01/25/why-simple-is-still-a-hard-sell/


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## bobsyouruncle (Dec 25, 2016)

none said:


> It's more people being arrogant with a good dose of stupidity (a dangerous combination (see Trump & global warming threads for further examples).
> 
> Having an EXTREMELY effective portfolio is dead simple. * Buy 3 ETFs in age dependent ratios. Save more than you spend. DONE.* That's it. SUPER SIMPLE.
> 
> ...


Sounds simple, but I hesitated for about a year because I was afraid and confused about opening an account, transferring money, and figuring out risk tolerance.

The curse of knowledge and the passing of time can make it difficult to understand just how timid people are without someone handholding them through the process.


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## Just a Guy (Mar 27, 2012)

Yes, it's much easier to trust someone else to do it for you. Especially if that person makes all their money not from doing what they do with your money but rather by convincing others that they know what they are doing. 

The brilliant part is they get paid first no matter how they do and people still give them more money every year because they would rather someone else lose their money for them.


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## My Own Advisor (Sep 24, 2012)

Like none, I don't think investing is _that difficult. _ It all comes down to some willingness to learn, be invested in the process, but then ultimately _behaviours. 
_
The financial industry makes it complicated for the retail investor because their livelihood depends on it. 

The majority of Canadians will never visit a forum like this because they don't care as much about their finances as CMFers do.

EDIT - Kudos to folks in this forum. You're engaged and you'll be richer in knowledge and wealth because of it


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## P_I (Dec 2, 2011)

none said:


> It's more people being arrogant with a good dose of stupidity (a dangerous combination (see Trump & global warming threads for further examples).
> 
> Having an EXTREMELY effective portfolio is dead simple. * Buy 3 ETFs in age dependent ratios. Save more than you spend. DONE.* That's it. SUPER SIMPLE.
> 
> ...


Excellent advice and thanks for the reminder. Another excellent reminder -- The Dream of a Perfect Plan October 16, 1999


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## lonewolf :) (Sep 13, 2016)

Your playing against some of the richest most powerful men in the world. Its like a poker game the money will flow to the strongest player. There is no way everyone can be a winner.


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## Just a Guy (Mar 27, 2012)

Actually, there are several areas too small for the large investors to go after, leaving a window of opportunity...

For example, boardwalk will only buy building, leaving individual units open to small investors ithout big boy competition.


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## Eclectic12 (Oct 20, 2010)

sags said:


> 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".




sags said:


> 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.




sags said:


> 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.




sags said:


> 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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## welsh-investor (Jan 5, 2017)

Agreed; investing is complicated. However, it becomes less challenging as you learn more. Do your own research and ask questions. Build your confidence before you build your portfolio.


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## Just a Guy (Mar 27, 2012)

Learning to walk is complicate, learning to talk is complicated, learning anything is complicated, yet babies learn, people learn and later, when asked, don't find it complicated at all...in fact, it would probably be too hard for most of us to rpteach someone else because we just do it. It's so ingrained that we don't even think about it anymore.

Over th years I've learned how to do many things, none of which I could do initially from construction, plumbing, electrical work, small engine repair, large engine repair, legal work (incorporation, probate, going to court, etc.), basic medicine (with 4 kids I learned about all sorts of issues and how to treat them), and all sorts of other skills...this is on top of what I actually went to school for.

In all the cases I learned one common thing...it wasn't as hard to learn as I initially thought it would be.


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## sags (May 15, 2010)

Anyone can invest, but if success is the measuring stick, the results indicate most people don't really understand what they are doing.

At least that appears to be the opinion of people like Bogle and Buffet.


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## Eclectic12 (Oct 20, 2010)

sags said:


> Anyone can invest, but if success is the measuring stick, the results indicate most people don't really understand what they are doing ...


Question is ... what's success?

I suspect some would see selling before the top as "failure" where I'd consider making a sizeable gain, paying the minimum taxes or zero taxes in order to be mortgage free in short order as "success".


Cheers


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## sags (May 15, 2010)

Everyone may measure success differently, but it would be difficult to argue that someone who has built a comfortable retirement on their own, without the presence of a DB pension plan, inheritance or lottery win..........has been successful.


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## redsgomarching (Mar 6, 2016)

Success would have to be defined based on whatever the person's goals are. My goal is 1 million in Liquid asset by 50. Currently 10% there!


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## tombiosis (Dec 18, 2010)

Just a Guy said:


> I've learned how to do many things, none of which I could do initially from construction, plumbing, electrical work, small engine repair, large engine repair, legal work (incorporation, probate, going to court, etc.), basic medicine (with 4 kids I learned about all sorts of issues and how to treat them), and all sorts of other skills...this is on top of what I actually went to school for.
> 
> In all the cases I learned one common thing...it wasn't as hard to learn as I initially thought it would be.


This.^

Years ago I took a great interest in archery and deer hunting. Over the next while I learned so much about archery and deer biology by reading, questioning experts, practicing my shooting etc etc, with the ultimate goal of harvesting a large trophy whitetail with archery equipment...(a HUGE challenge)...well, several years into it I finally achieved my goal, and I now consider myself very knowledgeable on these topics.
When I hit my 30's I realized I knew absolutely nothing about investing. It dawned on me that if I could learn so much about hunting deer with a bow, then I should be able to do the same with investing!
The main problem, though, is that learning about investing is much harder, because it is not nearly as fun...therein lies the problem. Finance is boring...not sexy or exciting...and I think that is why so many people couldn't be bothered.
I still find it hard to stay motivated with my investment learning...when I try to read a prospectus my eyes usually glaze over...especially when I get to the part about "executive compensation"!
I was showing my 14 year old the other day what some of these CEO's make...maybe one day he will be one!
I am trying to pass on what I have learned to him, because nobody taught me a damn thing when I was young. There should be a basic requirement in high school on Finance...its so important to not wait to get started!


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## Just a Guy (Mar 27, 2012)

My kids all liked playing monopoly while they were growing up. I didn't often play it with them though. I explained I liked to play monopoly in real life. When you explain real estate investing to them in terms of a game, it becomes more fun. I found fun ways to think about stocks too.

On a side note, what do you shoot? My kids like the diamond line, my son shoots a Prime and I prefer my mission ballistic.


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## tombiosis (Dec 18, 2010)

Hoyt carbon defiant


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## canew90 (Jul 13, 2016)

Good discussion. I think that most of the experts, advisors, books and even most discussions make investing sound complicated. First the is the question of strategy, Growth, Value, Passive, Dividend, Active trading, Commodities, Options, Shorts, Mutuals, Movies, etc, etc. Initially most people get caught up thinking that can buy cheap or buy the right stock and it grow like Apple, Google, as many, many others have and they'll make a bundle.
Chasing the growth or shooting star is a suckers game and the majority fail.
So learning the various strategies and deciding which suits you can be difficult and will not happen quickly.
That's why I think the Passive ETF craze is now so popular. Buy a few etf's which cover entire markets and get market reruns at a low fee. Simple and easy. Not my choice but probably right for many.


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## My Own Advisor (Sep 24, 2012)

I think you hit the nail on the head cannew - passive is preached because it is a) easy and b) academically sound. I'm not an indexing zealot but there is absolutely merit in the approach, for a small fee of course.

No good investing strategy is a get rich quick approach, it's more of a get wealthy eventually strategy and most of us couldn't care less about the discipline required, the long-term wait; the future, let alone any financial one. Unfortunate but true. The CMFers remember are by far _not in the majority...._


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