Canadians might be looking at the stock market today and thinking now is the time to get in. The rally may not be here quite yet, but there are some golden opportunities to catch. That being said, new investors aren’t going to want to dive in before taking a look at these tips.
1. Start small
Before you even start to invest, you’ll want to consider starting small. By that I mean a few things. First, look at your budget and see where you can afford to put cash aside each and every month on a consistent basis. That amount can be small at first while you adjust your budget to fit your investment strategy. You can always grow it later.
From there, you’ll want to start small when it comes to investments as well. This is in two ways. First, don’t put thousands into one stock because the stock is heading higher and higher, or you got a hot tip. Consider, instead, taking a small stake, seeing how it does, and adding to it later.
Finally, start small when it comes to the types of investments you make as well. In this case, I’m talking about commission fees. Take your time and find perhaps an exchange-traded fund (ETF) that offers all the investments you’re seeking. Then you just pay for one trade instead of several, keeping cash on hand.
2. Keep it regular
New investors should also try and make their investment strategy part of their routine. I do not mean investing every day. Instead, you can read up on the market on a daily basis, sure. But then mark some stocks down that you can add to your watch list.
These might be stocks you invest in later, or they might be ones you want to consider as part of another ETF. You’ll also want to continue looking at currencies, bonds, mutual funds, and guaranteed investment certificates (GIC) to get the best deal.
Then, once a month take that cash set aside from your budget to use for investing. Put it into the investments that you’ve thoroughly researched over the last year. Or, put it towards the ones you’ve already put aside in your portfolio.
3. Plan accordingly for all goals
There are different goals, and different goals need different investment strategies. So meet with your financial advisor to come up with different goals and how to invest in them. For instance, you’ll want a Registered Retirement Savings Plan (RRSP) for retirement. This might include a long-term GIC.
However, you’ll also maybe want to plan for a house or travel. For this, there are the First Home Savings Account (FHSA) and Tax-Free Savings Account (TFSA). In these cases, you won’t be taxed for taking out your cash when you need it.
In any case, also make sure your investments include dividends. A great option for extra monthly income would be including the iShares Canadian Financial Monthly Income ETF (TSX: FIE). Here you get access to a balanced portfolio of bonds and stocks, while bringing in a monthly dividend yield at 6.89%. These are top dividend stocks that usually distribute quarterly. However, you’ll be able to get that cash every month to invest!
Bottom line
Investing can be scary, and investors should always meet with their advisor or bank to figure out what’s best for them. Also, make sure you have an emergency fund and all debts paid before considering investments. Following these tips will help you create cash instead of losing it.
