Ten Principles of Successful Investing

1. Understand and be aware of the most common investment pitfalls.

Your emotions can have a negative impact on your investment results. Ignore market predictions; they are one of your main obstacles. Being aware of common investment pitfalls is half the battle.

2. Learn to recognize conflicts of interest in the financial services industry.

By understanding how the business works, you will be able to take better care of your money.

3. Asset class investing is a better way to invest.

Asset class investing is the most important step in taking control of your investments and has a bigger impact on your portfolio than market timing or stock picking.

4. Diversify. Understand the difference between good diversification and bad diversification.

A diversified portfolio should include: bonds, real estate investment trusts, Canadian stocks, Canadian value stocks, Canadian small cap stocks, U.S. large cap stocks, U.S. value stocks, U.S. small cap stocks, international value stocks, international small cap stocks, and emerging market stocks. Most investors and many advisors misunderstand the concept of diversification. They believe that because they own fifteen stocks or ten mutual funds, they are diversified. Too much overlap equals bad diversification and improper diversification can be a recipe for disaster.

5. Discover and use the Fama/French 3-Factor Model when constructing and designing your portfolio.

• Stocks outperform bonds
• Value stocks outperform growth stocks
• Small company stocks outperform large company stocks

By knowing this, you can appropriately weigh the level of risk you are willing to undertake and, along with it, the expected level of return.

6. Execute your asset allocation with asset class investment tools.

All tools are not built the same. Build your portfolio and work with an independent advisor who is free to recommend the best tools in the market place (transparent, precise, tax-efficient, and flexible).

7. Recognize that costs matter.

Taxes, management fees, trading costs, and investment advisory fees have an impact on your long-term investment results. Know your costs of investing.

8. Write an investment policy statement (IPS).

A qualified, fee-based investment advisor can help you with this. An IPS will keep you within your specified risk parameters and greatly enhance your investment experience.

9. Co-ordinate and integrate your investment plan with financial-planning and life-planning issues.

Investments and life should work together; a well-considered plan is crucial to ensure that your dreams become financially viable.

10. Get on with your life.

By using some of the best long-term strategies in the marketplace, you will become more confident that your portfolio is reaching its full potential. This will bring you peace of mind, freeing you to focus on the things that are most important to you and your family