I’ve always been a gifted academic, fortunate that I see complexity as a puzzle that can be quickly solved. And long ago I learned to stop suffering from paralysis of analysis to make recommendations and follow through on them. But having an academic bent or good ‘gut’ instincts for the market means nothing when you’re saving for retirement.
Since I first got into the brokerage business I’ve always struggled with our collective need to “beat” the market, although there is merit in managing risk and opportunity. In my opinion, building a strategy based on a lottery ticket mentality turns the stock market into an elaborate casino. I personally don’t like spending time in casinos and I don’t want to work in one.
Don’t get me wrong; I have clients who have made enormous amounts of money speculating. And they have in the main retained most of it. They deal with me because I am a source of information and analysis, a set of second eyeballs for their deals, an arbiter of technical trends and a latent conscience.
In my opinion, this doesn’t represent most investors. As much as we all like to sally forth from the walls of our complacency, taking a risk with a little bit of money, close contact with the time demands, angst and uncertainty of investing in a single speculative stock quickly defeats us.
Frankly, if you think about the last “big thing” in Canadian markets, many investors would have been better off spending a smaller portion of their money on bud and smoking it. At least they would have been chill.
In my many years in the industry I see three highly effective investment habits over and over that lead to a healthy retirement:
1. Save Systematically
Either you’re committed or not.
I have seen people with below average incomes saving disproportionally larger shares of their income and amassing huge sums of money. And I have seen others with large incomes facing the horror and panic of having five years to save enough money to last them for 40.
Saving systematically is a habituation. If you have the discipline to commit to and keep to a saving program then it is merely a matter of defining what that amount will be for the year and reviewing it to increase it on an annual basis.
If you need a little external discipline, then borrow it to invest, provided you pay it off during the year.
I have seen both approaches work very well over the last 25 years.
2. Have a Sound, Consistent and Easy Strategy to Follow
There are far too many get-rich-quick schemes out there and they inevitably line the pockets of the purveyors and producers of this garbage.
Some years ago, a friend and colleague reminded me that the market was driven by fear, greed and envy. Yet successful savers that I have known and come to respect fall for none of these. That doesn’t mean they don’t suffer from anxiety from time to time, or that they are not tempted to jump on board the “latest thing”. It means regardless of the temptation or fear, they don’t depart from their strategy.
A sound strategy is one that is replicable, timeless and concise. We will be talking about building a retirement portfolio using rate reset preferred shares, or new issues, real estate investment trusts (REITs), strip bonds or only bank and insurance stocks in later posts. They can all form part of a sound strategy singularly or in combination.
Regardless of your short-term risk profile, a strategy like this is built around doing the same thing over and over. They are not “Dire Straits” opportunities. You know the ones:
“That ain’t workin’ that’s the way you do it
Money for nothin’ and chicks for free”
3. Be Clear on Your Goal
Goals can be clear, concise and easy to monitor. Too many moving parts and the chances that you will keep to a routine that will allow you to meet the goal is lost.
Many years ago, I started working out at a gym. I had one of the PTs put together an exercise routine for me that focused on upper and lower body on alternate days. I spent the first month or so trying to learn the “slow, slow, quick, quick” of the dance of the machines. I became about proficient as I was with waltz classes. Don’t ask me to dance.
I only became successful when I hired a full time PT that I was committed to 3 days a week. The goal was to make the work out; I allowed him to guide me through the routine, vary it for maximum effectiveness and he held me accountable for both cardio that I did on my own and my off-day routines. The point? I had a goal: to make every workout I had scheduled and in doing so keeping the PT off my back.
The time to start is now. If you’re like most people, you’re carrying a lot of garbage.
It’s time we sat down and explored your attitudes toward saving and set a measurable and achievable goal to help you start down the road to financial fitness.
I’m not going to promise you that it’s easy. I can promise you that after meeting you will feel lighter because we’ve helped you take out the trash. I can also promise that we can set a goal that is both timely and achievable.
Partner Linda Odnokon (437-266-1126) and I (437-266-1125) are both available to explore your financial anxiety. Give us a call.
 Easy, easy money for nothin’, chicks for free) (I want my, I want my MTV)
(Money for nothin’ chicks for free)
Written by Mark Knopfler, Gordon Sumner • Copyright © Universal Music Publishing Group
David Chellew and Linda Odnokon have been life partners and in business together for almost 19 years. During that time, they have mellowed into their respective roles and enjoy working with individual investment clients. Dave is a Portfolio Manager and Linda is an Investment Advisor with iAS and work out of the co-work space Brightlane on King West in downtown Toronto.
Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.
This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.