# Basics: looking for help to start investing



## waterboy4800 (Apr 3, 2009)

Iam currently 24 years old and by year end have approx $73,000 sitting in a savings account with very low interest. I have zero knowledge on investing, i have a TFSA maxed out for the current year, and i plan on dumping 25k into my RRSP this year (lots of room) for the Home buyers plan one day. Is there any recommended books or helpful resources on line that can educate me about stocks, funds ect? i dont even know where to begin, but im ready to start investing and getting a lil more in return than 1% savings

Thanks, any additional ideas would be helpful as well


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## CanadianCapitalist (Mar 31, 2009)

waterboy4800 said:


> Iam currently 24 years old and by year end have approx $73,000 sitting in a savings account with very low interest. I have zero knowledge on investing, i have a TFSA maxed out for the current year, and i plan on dumping 25k into my RRSP this year (lots of room) for the Home buyers plan one day. Is there any recommended books or helpful resources on line that can educate me about stocks, funds ect? i dont even know where to begin, but im ready to start investing and getting a lil more in return than 1% savings
> 
> Thanks, any additional ideas would be helpful as well


Before you invest even a single cent, I'd recommend reading up... Anything by John Bogle, Benjamin Graham, William Bernstein etc. should give you a good grounding in understanding the basics of finance. It's not rocket science really. However, watch out for the emotional challenges in investing, which aren't so simple to navigate...

http://www.canadiancapitalist.com/recommended-reading/


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## leslie (May 25, 2009)

Don't agree with your putting $$ into RRSP when it is earmarked for real-estate downpayment, but you didn't ask that.

* Know your limitations. Start with large index ETFs. Google 'couch potato strategy'. Don't pick individual stocks unless and until you know how to read financial statements and can do proper analysis. Too many people look at the dividend yield, get someone to tell this "it is safe" and buy the stock.

* Ease your way into common equity. You won't know your tolerance for price volatility until you live through some market swings. Those don't happen every year, so keep the $$ invested relatively small until you have proven your mental toughness to yourself. Google "dollar-cost-averaging". 

* There is a list of the best web sources of beginner information on investing. Read Shakespeare start to finish.


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## Oldroe (Sep 18, 2009)

Start with The wealthy barber this is JK for good sound financial decisions, then read No Hype Gail Bebee then the first 2 Derck Fosters books. Now read the previously mentioned books. 

Be carefully reading blogs that say nothing and are selling investment letters.


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## Jon202 (Apr 14, 2009)

You didn't really answer the 'why', so the 'what' is impossible to give.

You have to determine your financial goals (timeline, risk, returns, etc..) before setting a plan into place. A first home, emergency fund, retirement, income replacement/supplementation, etc etc.... 

Your goal should guide you to your plan.


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## byronbb (Jun 7, 2009)

"High interest" savings accounts are a good laugh eh? Can't help you beyond what other's have said. There are always GICs, government bonds, and/or some hard assets like gold/silver/or land. Really what I am saying is not all of it has to be played into the market. If 1% return is bad to you, imagine what -5% or -10% feels like.....


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## MoneyMaker (Jun 1, 2009)

pick up The Intelligent Investor by Benjamin Graham, one of the most read books on investing


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## waterboy4800 (Apr 3, 2009)

Thanks for your time! you suggest not to invest with Home buyers plan as an RRSP if im looking to buy a house in the next 2 years?

Short term goals:
- buy a house ( next 2 years )
- Build a comfortable savings account for emergencies

Long Term goals:
- Max out RRSP (yearly)
- Max out TFSA (yearly)
- Pay down house
- Save for retirment using rrsp and smarter investing ( stocks, funds ect )


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## Murph (Sep 9, 2009)

Before you invest anything, buy William Bernstein's The Four Pillars of Investing. It's a good primer on investing and asset allocation. 

Since you are fairly young, you could have a portfolio more geared towards stocks, depending on your risk tolerance and investment goals. For the income producing investments look into GIC's, Government Bonds, REITS, ect. For stock allocation buy index funds (Google TD ESeries, they have a low MER) and ETF's. You might want to buy some commodities and some precious metals too (silver seems a better buy than gold right now). Oh, and remember to keep some cash in an emergency fund. Good luck.


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## leslie (May 25, 2009)

I would like to prove an offset opinion to the suggestions above. 

The vast majority are books about the investing overview (e.g. asset allocation, rebalancing, etc). They may provide good discussions on indexing, but they do not provide any advice about the actual nitty-gritty of stock-picking.

Some promote ideas that are 'suspect'. E.g. 
* that you should ignore the capital gains/losses on your stock and pay attention to only the dividends.
* that dividends will make up the greatest portion of your total return.
* that asset allocation will increase your returns.
* that back-testing 'proves' that screening for specific attributes will outperform the market.
* that there is such a thing called "margin of safety" which even Benjamin Graham cannot define consistantly from page to page or book to book.

Even the books that deal directly with stock picking never seem to give you the bad news - that you must first be able to read and understand financial statements. As a result, too many people finish reading a dozen of these books and think they are qualified to pick stocks.

Before you even THINK about moving beyond indexing into stock-picking see if you have the necessary attributes.


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## leslie (May 25, 2009)

Back in 1979 I was first encouraged to invest in stocks (as opposed to the GICs and CSB I held). The subject was introduced by the question "Do you know how to read financial statement?" , and I was handed a small pamphlet on the subject (reading FS's).

At that time there was no self-help industry promoting the classic investment bibles or the undending stream of beach-reading to 'educate' investors. The media did not print canned advice and there was no 'financial advisor' industry promoting asset allocation and rebalancing. I read the pamphlet and then enrolled in a night-school class on book-keeping.

I continue to think that THAT path of knowledge was and is the best approach to stock investing. If you will only be buying ETF's of large indexes then there is no need to read any of the publications listed by the others. But is you want to buy stocks, then you need to read financial statements well.


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## Rickson9 (Apr 9, 2009)

leslie said:


> Back in 1979 I was first encouraged to invest in stocks (as opposed to the GICs and CSB I held). The subject was introduced by the question "Do you know how to read financial statement?" , and I was handed a small pamphlet on the subject (reading FS's).
> 
> At that time there was no self-help industry promoting the classic investment bibles or the undending stream of beach-reading to 'educate' investors. The media did not print canned advice and there was no 'financial advisor' industry promoting asset allocation and rebalancing. I read the pamphlet and then enrolled in a night-school class on book-keeping.
> 
> I continue to think that THAT path of knowledge was and is the best approach to stock investing. If you will only be buying ETF's of large indexes then there is no need to read any of the publications listed by the others. But is you want to buy stocks, then you need to read financial statements well.


I strongly agree.


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## Oldroe (Sep 18, 2009)

I've read a couple those books and would like to add that reading CEO/CFO comments will tip you to problems. If it's good it will be as clear as glass and if theirs a lot of word smithing, you just can't understand, then read the statements with care.


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## cboenews (Nov 23, 2009)

waterboy4800 said:


> Iam currently 24 years old and by year end have approx $73,000 sitting in a savings account with very low interest. I have zero knowledge on investing, i have a TFSA maxed out for the current year, and i plan on dumping 25k into my RRSP this year (lots of room) for the Home buyers plan one day. Is there any recommended books or helpful resources on line that can educate me about stocks, funds ect? i dont even know where to begin, but im ready to start investing and getting a lil more in return than 1% savings
> 
> Thanks, any additional ideas would be helpful as well


After you do some research, I would suggest following major news sources on the market to gauge where to invest. You can also take numerous volatility indexes like the VIX, the Chicago Board of Options Exchange volatility index, into consideration. Here is the cboenews site with great information on the market volatility:

CBOE Volatility Index (VIX) one year after the financial crisis: where its been, where is it now and what is says

Hope this helps!

Kate
advocate of cboe


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