Common Investment Myths – And How to Break Them

 

 

Let’s talk about investment myths. Have you started investing yet? If the answer is yes, think about the last time you sat down with a financial advisor and reviewed your portfolio to ensure your investment strategy is still aligned with your goals. If the answer is no, ask yourself why not? Maybe it’s because you don’t think you can afford it,  maybe it’s because you’re afraid of the risk versus reward or maybe it’s because you don’t see the value in paying fees.

 

Here’s the good news, today I’m debunking common investment myths. Actually, I’m going to shatter them. Whatever the reason may be that’s holding you back from reaching your full investment potential, it all ends now. If you’re hesitant about seeking financial advice, investing in the market and exploring different investment options, don’t worry because other people are too – that’s why there are so many common investment myths.

 

The key is to tell the truth about the current state of investing and help Canadians implement an investment strategy that you’re comfortable with.

Here are the real answers to three common investment myths:

 

I can’t afford to invest

 

Yes, you can. Everyone, whether you’re 16 or 56 can afford to put a portion of your after-tax income towards investing. The percentage varies depending on your monthly household expenses and individual disposable income, but yes everyone can afford to invest. So often people feel that saving investing are just for the wealthy – and that’s just not true.

 

I don’t need professional advice

 

Oh yes you do, everyone does. Why? Because there is so much more to creating an investment strategy than choosing the right stock at the right time – and I don’t do that because that’s not what smart investing is about.

 

The truth is investing is about finding solutions that align with your short term and long-term goals as well as your risk tolerance and time horizon. The Manulife investment philosophy is “There’s a difference between access to investments and investing successfully. Managing money wisely is a full-time job which takes experts with significant experience and skill.”

 

On a side note, timing the market to buy in on the absolute lowest day of the year and selling on the absolute highest day of the year to gain the maximum profit is another common investment myth. That doesn’t happen.

 

I shouldn’t have to pay fees

 

Well yes you should. In life we all have to pay for a professional service. I can’t think of a scenario where you get a service for free – except for the library. If you want the best dentist then you have to pay for it. The exact same principal is true when it comes to investing.

 

Of course, you can open a self-directed online brokerage account and manage your own money, but do you have the years of experience and professional expertise of a financial advisor? This is the real reason why paying for a professional service is worth the cost. It’s about access to investments (because you could do that yourself online) it’s about the experience and the expertise.

 

I hope this helps overcome some of your hesitations when it comes to building a relationship with a financial advisor and creating an investment strategy that fits your individual needs. If you want to discuss other common investment myths then let’s chat.

 

*This content was originally created by Manulife Securities for information purposes only. It has been distributed for advisor publication.*

Keep an eye on your mailbox – it’s tax slip time

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It’s the time of the year when you may start receiving tax slips related to your 2016 investments. Some slips may look familiar, others may not. Here’s a quick description of some of the more common slips and what you’ll need to do with them.

 

If you held mutual funds in a non-registered account, and the mutual funds paid a distribution in 2016, you’ll receive a T3 slip (or a Relevé 16 in Quebec). This slip will tell you how much income (interest, dividend or capital gains) you’ll need to report on your tax return for the mutual fund listed on the slip.

 

You may also receive a T5 slip, or a Relevé 3 in Quebec. This is similar to a T3, but it tells you how much income you received during the year from mutual fund corporations (as opposed to mutual fund trusts), or from any stock dividends you received.  You’ll need to report these amounts on your return also.

 

It’s important to note that if you held a non-registered account and received a mutual fund distribution, or dividends from a stock, you will receive a tax slip – even if that income was reinvested and not paid to you in cash.

 

Finally, if you sold any securities such as stocks or bonds in 2016, you will receive a T5008 slip. This will report any taxable gains or losses you realized when you sold those investments.

 

Before you file your tax return this year, make sure you’ve received all the slips that have been issued to you. You might also be receiving some that I haven’t mentioned above – for example, if you’re currently living outside of Canada. At the end of the day, if you’re not sure which slips you should be expecting, get in touch with me my direct line at (416) 571-0369 and I’ll help point you in the right direction.

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