Investing smaller amounts over time or single lump sums: Understanding what approach is right for you.

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When it comes to investing, one of the first questions many consider is whether it’s more beneficial to invest frequently in smaller amounts or single large sums. By understanding both strategies and their pros and cons, you can find an approach that works for you.

Dollar-cost averaging or DCA, is an investment strategy where you invest the same amount of money at regular intervals to reduce the overall impact of price volatility of the investment and lower the average cost per share. Regardless of the investment’s price, investors following the DCA approach will buy shares regardless of how the market or their investment is performing at that point in time.

Alternatively, lump sum investing involves taking all or a significant portion of your investable cash, and investing it all at once. It’s about putting your money to work as soon as possible and relying on compounding growth over the long term.

Let’s explore the benefits of both approaches:

Why dollar cost averaging might be right for you

It’s a way to get started

The process of just starting to invest can seem insurmountable and for many the thought that they do not have enough to make a difference in the long term can have them avoid the markets all together. Investing smaller amounts over a set period of time can be a good strategy to overcome this obstacle and build the assets you need to reach your financial goals without large sums of money.

Less guesswork

Contrary to lump sum investing, dollar cost averaging can help take some of the emotions out of investing by having you develop the habit of contributing consistently to your investments no matter what is happening in the market. This approach also helps you avoid the costly pitfall of trying to time the market in the attempt to chase greater returns.

Automation

Using the DCA approach allows you to integrate your chosen investment amount into your budget, strengthening the routine of investing on a continual basis. Another benefit is that you can automate the deposit of funds into your investment account and instruct your brokerage firm or adviser to invest the amount automatically.

Why lump sum investing might be right for you

Reduces chances of spending the money elsewhere

For some, it may be hard to dedicate money to their investments on a routine basis. Additionally, there may be temptation to spend the money elsewhere and forgo investing all together. By deploying a lump sum investment approach you avoid these risks and put your money to work immediately.

Decreased Costs

Brokerages and financial institutions often charge a fee for placing trades which can add up if investing using the DCA strategy. Lump sum investing doesn’t have the trading and transactions costs that can build up over time, helping to ensure more of your money is invested rather than lost to fees. It’s a good idea to review fees for brokerage firms and financial institutions before opening an investing account to ensure you work with one that has a fee structure that works best for you.

Dollar-cost averaging and lump sum investing both have their benefits and drawbacks. While it may feel like you need to choose one strategy over another, you can deploy a blended strategy. Commonly, wise investors will invest on a scheduled basis while also investing some or all of larger sums they may receive, like annual bonuses.

Regardless of the frequency and amount you decide to invest, focusing on your long-term financial goals and developing a dedicated approach can help set you up for success on your investment journey.

Overcoming your behavioural biases when investing

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Investing is rife with choices, and sometimes to avoid the uncomfortable feeling of being overwhelmed, we choose the path of least resistance or go with our gut feeling; we rely on biases or mental shortcuts to guide our decision-making. Further, human behaviour is often influenced by our unconscious emotional and cognitive biases. These biases help our brains avoid becoming overwhelmed by the decisions we make each day. While these mental shortcuts may help us in some aspects of our lives, it’s important to recognize that investing wisely requires you to go beyond a “gut check”, to use sound investing principles and do thorough research.

To avoid falling for your own behavioural biases, let’s examine some common types you may recognize.

  • Status Quo bias:The status quo bias is the tendency to keep things as they are or “stick with what you know.” With respect to investing, this bias might not seem like a problem. However, avoiding risks associated with change or perhaps favouring what you’ve always done might also mean that you fail to take advantage of investment opportunities or examine and track your investments in relation to your financial goals, risk tolerance and time horizon.
  • Confirmation bias: One factor that reinforces the status quo bias is confirmation bias. Confirmation bias means that you seek out information that only confirms your beliefs. In investing, this might show up as having difficulty changing your view of a particular stock, even in the face of data supporting the opposite view.
  • Availability bias: Availability bias implies that people believe that an event that has occurred recently will occur again soon, regardless of the probability that it actually will. When something has occurred recently or has significantly impacted us, our brains are even less likely to correctly weigh the risk or probability that it will happen again. In investing, this may show up as making a rash investment decision based on a recent headline, advertisement, or story you heard from a friend causing you inadvertently to deviate from your financial plan.
  • Present Focus bias: It’s natural for people to focus on immediate and tangible things – when compared to planning your next vacation or saving for a new car, saving for your retirement or your child’s post-secondary education may feel abstract and out of reach. For example, you may not know how much money those things will cost in the future or you may feel uncertain about how your investment portfolio will perform over such a long time horizon. As a result, you might focus on putting money towards more immediate wants and needs to avoid the discomfort of the perceived unknown.

Investing with your instincts might be tempting or feel natural, but grounding your investment decisions on fundamental research and a long-term view of your investment goals can help you invest wisely. In addition to accessing the free and unbiased resources available through the Alberta Securities Commission’s CheckFirst.ca website, consider other ways you might reduce the impact of unconscious biases on your investment strategy, such as enlisting the services of a financial advisor or robo-advisor.

Achieving your short-term goals with high-interest savings accounts and guaranteed investment certificates

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Thoughtful financial planning is what will determine your success as an investor. A good rule of thumb when planning is to organize your financial goals into three planning time horizons. These horizons typically include short-term goals that you want to achieve in the next six months to five years, medium-term goals that you want to achieve in the next five to ten years and long-term goals that you want to achieve in ten years or more. Investors often use a variety of different investments for medium and long-term goals because they have a longer period of time to recover from potential downturns before needing their money. When looking at short-term goals, where you may need to withdraw sooner and cannot afford to lose money on riskier investments, there are a couple of options to consider.

Understanding high-interest savings accounts (HISA) and Guaranteed Investment Certificates (GICs)

Short-term goals might include saving for a down payment on a new car you want in a few years, an exciting trip to Hawaii or even establishing an emergency fund. Regardless of your short-term goals, HISAs and GICs enable you to generate returns on your principal without exposing your money to the risk of loss.

As the name implies, HISAs are savings accounts that generally offer higher interest rates than traditional savings accounts. Whereas a normal savings account may have an interest rate of approximately 0.5-0.8 per cent, a HISA may have an interest rate of 1.5 to 2.25 per cent. This may not sound like much of a difference, but if you saved $10,000 in a savings account with a 0.8 per cent return and another $10,000 in a HISA offering 2.25 per cent, after five years your HISA would have generated a whopping $770 more than the traditional savings account.

GICs are another avenue for investors to save for short-term goals. By purchasing a GIC, you are locking away your money for a set amount of time to receive either a fixed or variable interest rate. While these rates can range from approximately 1.5-5.00 per cent, depending on how long of a term you select, the money becomes inaccessible until the term finishes. If you need the money sooner, you will often need to give advance notice and pay a penalty that can severely negate any returns you would have made.

What should you consider before using a HISA or GIC?

With guaranteed returns, it may seem like HISAs and GICs are the perfect investment, but there are things to consider:

1) Open vs Locked-in: HISAs allow you to access your money when needed, whereas GICs have your money locked in. Make sure you assess whether the liquidity of your money is important. For something like an emergency fund, you want to make sure you have immediate access.

2) Fluctuating interest rates: During times of high inflation like we are currently seeing, the Bank of Canada increases interest rates financial institutions can offer to incentivize Canadians to spend less and save more. If inflation decreases in the market, you can expect interest rates to lower on GICs and HISAs.

3) Neither are ideal for medium to long-term goals: While they are less risky than other types of investments, HISAs and GICs interest rates rarely surpass inflation (the yearly increase in the cost of goods and services). So while they are ideal for short-term goals, the purchasing power of your money will diminish over the medium and long term by using HISAs or GICs exclusively.

HISAs and GICs can be powerful tools in helping you reach your short-term goals. By considering when you need to utilize the money and how readily you will need access to it, you can choose the suitable one for you.

 

Investing during uncertain times and high inflation

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For the past few decades the Canadian economy has experienced exceptionally low inflation rates ranging from one to three per cent. Unfortunately, Canadians today are challenged with a 30-year high inflation rate of 6.8%, with expectations that it will remain high through 2023. With rising inflation rates, how does this impact your income and investments? And what should you do?

What is inflation?

Inflation is a measurement of the increase in the cost of goods and services over time, which in turn impacts the purchasing power of your money. For example, an apple today could cost you $1, but the following year it could be priced at $1.07. In Canada, inflation is measured using the Consumer Price Index, which tracks the increase in the prices of goods and services across eight major categories. From April 2021 to April 2022, gasoline, food and shelter have all seen inflated prices that are more than double the Bank of Canada’s (BoC) benchmark goal of three per cent maximum. These rising prices mean that the quality of life for those with low, stagnant and fixed incomes will be significantly impacted, consumers will afford less goods and services, and businesses may generate lower profits. To learn more about inflation, please visit the Bank of Canada.

Why is inflation rising in Canada?

Inflation in Canada has been greatly impacted by both national and international pressures, such as:

  • record low-interest rates
  • government’s pandemic response to stimulate the economy
  • massive disruptions in the global supply chain
  • and the ongoing war in Ukraine driving up commodity prices

To slow down and reduce inflation, the BoC has begun increasing interest rates in phases, which discourages consumers and businesses from borrowing money and spending. While these increases put added pressure on businesses and families in the short term, if implemented correctly these can bring down inflation and stabilize markets too.

Investing during high inflation

During times of high inflation and uncertain global markets, it is not uncommon to feel anxious as you watch interest rates rise and some or all of your investments fall. Investors who have more experience and can tolerate more risk with their money may look for opportunities to capitalize on certain industries or investments that have outperformed during periods of high inflation. It is worth noting that the past performance of any investment is not an indicator of future performance. By attempting to change your portfolio to capitalize on different economic situations, you are exposing yourself to the risk of trying to time the market, which more often than not will have you underperform average market returns.

During bear markets (when markets decline by more than 20%), it is important to recognize how you may be feeling about your portfolio and revisit your financial plan and investments. If you work with a financial advisor, you may want to arrange a meeting with them to discuss the long-term view of your investments and how they are tracking towards your financial goals for peace of mind. For those without an advisor, remember that periods of high inflation may be temporary. Higher interest rates and recovering global economies may lessen the severity of inflation quicker than you think. Before you take any action, consider the time horizon of your investments and their underlying fundamentals. If you need more help assessing the long-term suitability of your investment portfolio and financial plan, you may want to talk to a financial planner or a registered financial advisor.

Without question, Canadians are facing challenging times. When it comes to your investments, stay focused on your financial goals and avoid the noise in the news and media. By maintaining a long-term view and a diversified investment portfolio aligned to your risk tolerance and goals, you can weather the storms of uncertain markets.

Active Investing: Understanding the basics

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Investing is a wealth-building tool that can be as involved or as hassle-free as you want. Active investing is a hands-on approach in which either you or a financial advisor acting on your behalf invests with the objective to outperform the market’s average returns. Passive investing involves investments in funds like exchange-traded funds and indexes that track and invest in the entire stock market and require little to no involvement from the investor to achieve average market returns.

For those interested in a more hands-on approach to investing, the active investing strategy may be more appropriate. Learn more about active investing and what you should consider before adopting this strategy.

Research is fundamental

Active investing comes in many forms, whether it is stock-picking on your own or through actively managed investment funds or portfolios created by financial advisors. The key to being successful at active investing is researching the fundamentals of any investment and ensuring that it meets your risk tolerance and aligns with your financial plan. Elements of this research include performing a comprehensive analysis of the company’s financial statements and other public reports to understand its business, revenue, cash flow, and debt etc.

It’s all about balance

When assessing the fit of an investment within a portfolio, investors or financial advisors are tasked with ensuring that it does not impact the overall balance. For example, if you invest in a company already held in an index fund you own, you are unknowingly increasing your investment in that company for better or worse. Suppose you buy too much stock in the technology sector, for instance. In that case, you may imbalance your portfolio towards that sector and see greater losses if that industry has a downturn, more so than a broadly diversified or balanced portfolio.

Know the risks

Generally speaking, active investing can yield higher returns but also carries with it higher risk. Even with comprehensive analysis, investors are not guaranteed high returns through picking individual stocks. In fact, more often than not, they underperform the market. The buying and selling of stocks can also expose you to cognitive or behavioural biases that can cause you to sell your investments at the worst of times or take on more risk than you are willing or comfortable to accept normally.

Active investing can be a great way to grow your wealth but is far more complex and involved than a passive approach. Fortunately, you are not restricted to any one strategy and can implement a blend of both passive and active strategies to create a portfolio that aligns with your unique financial plan, risk tolerance and goals.

 

 

Back to School – Not Just for Kids

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The air is crisp and the leaves are changing colour. While some things have stayed the same – the end of summer and the start of school – others have drastically changed. The COVID-19 pandemic has certainly impacted us in ways we could never have imagined.

Many of us are juggling the needs of work and our family, others may have spent a bit more than anticipated over the summer, or are having to pull the belt tighter due to changes in employment. Most of us have had to make choices that affect the amount of money we have brought into our household. Whatever your situation, the good news is that fall is a great time for you to “go back to school” by reviewing your financial situation and increasing your financial knowledge, which can help you stay on track for the rest of the year. Here are some tips to get you started:

Review your budget.

Over the summer, budgets tend to slide. The fall is a good time to review the budget you set earlier in the year to make sure you are still on track to achieve your personal goals. Look back at receipts and financial statements to see your family’s spending pattern, then account for any new or anticipated expenses. Ask yourself the following questions: Are you saving what you had set out to? Are you able to pay down debt? What is your cash flow situation?

While you’re at it, take some time to outline how you will manage your finances for the rest of the year. With the holidays around the corner, factor this into your budget and consider emergency funds for any big-ticket items that could pop up, such as car or home repairs. By knowing where your money is going, and living within your means, you take control of your spending and reduce your stress.

Review your financial statements.

It’s easy to allow financial documents like bank or investment statements to pile up unopened. Take the time to open all your financial documents and review your statements. Be sure you understand the investment fees you’re paying, and how your portfolio is performing. Be sure to note any questions you have for your financial planner or investment adviser. Follow up if there are any changes to your accounts or new investments that you do not recall making.

Study up to increase your financial knowledge.

Start by identifying where you may have gaps: there are many places online, such as CheckFirst.ca, that offer quizzes to help you gauge your knowledge. Start with the Investing Basics quiz – it is a good general overview of investment fees, financial planning, risk tolerance and the legitimacy of investment offers. Commit to improving your financial knowledge in the areas you find challenging. While money-management and investments can feel confusing, there are many reputable resources available to help you.

Talk to a financial adviser.

If it all seems overwhelming and you’re not sure how to manage your finances, a professional may be able to help and identify areas for improvement. If you have a financial planner or investment adviser, reach out to them for a check-in to discuss your questions or concerns. If you don’t have an adviser and want one, consider meeting with a few individuals to see who might be a good fit for you. If you can’t afford to hire one right now, speak to your current banking institution. Banks have obligations to their consumers and should be willing to talk to you about your situation. Before meeting with them be sure to check their registration and learn how the adviser or bank are getting paid.

Set Goals.

Just like in school, setting achievable goals will help you conquer that next milestone. Pay off debt? Save more money? Put away for emergency fund? These are great goals but in order to be successful in meeting them, goals need to be specific, realistic and measurable. Instead try “Pay off $3,000 of debt by the end of 2021” and map out how you will do it.

Be flexible.

School today is very different than last year, and you can think about your finances in the same way. Situations change, and as they do, adjust your financial plans, budget and goals accordingly.

A bell isn’t going to ring to let you know you need to learn more about your financial future; it’s up to you to decide when to head back to school and build your own financial know-how. We might not know what the year will bring, but being proactive about our financial knowledge and planning for the future may alleviate some stress. It may just help you sleep better at night and give you one less thing to think about as you tackle all the other demands in your life.

For more information on increasing your financial knowledge, making wise investments, learning about budgeting, how to check registration and how to talk to a financial adviser visit CheckFirst.ca. It is chock-full of helpful tools and resources.

What to consider before day trading

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The number of novice investors day trading has surged during the coronavirus pandemic. People stuck at home have turned to playing the stock market on trading platforms with the hopes of big returns on their investments. While it has made some savvy investors rich, day trading has left many others with massive losses and in worse financial shape than before.

Day trading is risky and different from traditional investing. Day trading involves rapid buying and selling of securities to take advantage of small movements in prices. As a day trader, hedging your bets across a variety of day trades comes with inevitable losses on some trades and gains in others, with the goal of ending the day in the green. Day trading isn’t for everyone, and it takes a particular type of person to ride day trading’s rollercoaster of volatility day-in and day-out. Most individuals do not have the wealth, the time, risk tolerance or the temperament to make money and to sustain the devastating losses that day trading can bring.

If you are considering day trading, make sure you understand its dangers:

Huge risk – losing money is part of day trading.

Don’t enter into day trading if you don’t have the money to lose and you don’t have the flexibility to sustain losses daily across multiple trades.

Quick wins don’t guarantee future success.

Be careful of unfounded confidence and emotional decisions – each trade is unique and a huge win one day could be a loss the next.

Be prepared to treat it as a full-time job.

Day trading is time-consuming – to be successful, you need to have the self-discipline to view it as a full-time job and conduct ongoing investment research and monitoring.

Watch out for claims of easy profits, hot tips or expert advice

Relying on investment advice from day trading firms or platforms, websites, social media like TikTok or charismatic day traders can be dangerous as they may be seeking to gain profit from their recommendations. Don’t believe any claims without checking sources thoroughly.

Remember that seminars, classes and books about day trading may not be objective.

Find out whether anyone offering advice about day trading stands to profit if you start day trading.

Beware of easy training sales pitches.

Day trading training systems are heavily marketed to make it seem like an easy, safe, fun way to make money. These commercials leave out details about the pressure, the importance of researching and testing, and the high levels of risk.

 

If you recognize this and are still determined to try your hand at day trading, make sure you do the following:

Understand the risks and then choose whether this type of investing is right for you.

Know yourself as an investor, your risk tolerance and your financial goals before you decide to day trade. Take our Check your risk tolerance quiz to see if day trading aligns to your investing style. > Go to quiz

Learn all you can about investing and day trading.

In order to increase your chances of success, you need expertise, so read and research all you can on it. Day trading is not ideal for those new to the investing world.

Assess if you have the right personality and discipline 

You need long-term dedication, a focused mindset and the ability to ride the stressful highs and lows of the day trading roller coaster.

Only invest what you can afford to lose.

Day traders typically suffer severe financial losses in their first months of trading, and many never attain profits. Set aside a set amount and don’t get caught up in the hype or panic to invest more as a way to make up losses. Think of it like gambling in Las Vegas – it’s never a good idea to double down at a table when losing. Get up and walk away.

Research a good trading system, and keep at it.

Day trading requires a lot of self-discipline and trust in your trading system and algorithms. It is more complicated than just following a hunch. If you don’t have a system and manage risk, you are more likely to lose money.

Day trading requires expertise. If you do decide to pursue it, do your homework, and develop a financial plan to ensure it’s the right approach for you. Remember, all day trading firms must be registered, visit CheckFirst.ca to check the registration of any firm or call 1-877-355-4488.

5 Steps to Manage Financial Stress

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We are living in challenging times and every day Albertans face the unprecedented combination of economic uncertainty, ongoing COVID-19 dangers, volatile stock markets, a shaky job market and rising costs of living expenses. In a recent national poll by FP Canada[1], more than forty percent of people in Alberta ranked money as their biggest cause of stress in life and more than half said the pandemic had impacted their finances.

Financial stress can impact your health and relationships, while negatively affecting how you approach money and planning for your future. The good news is that you can take control and do what’s right for you. By taking these five steps you can reduce your stress level, optimize your expenses to weather the storm and avoid unwise investments.

1. Start with your budget

When it comes to your finances, there is no better ally than your budget in order to understand where your money goes and give you a plan of action that can relieve stress. If you don’t have a current budget or know how to make one, visit CheckFirst.ca  to build your own. Compare the money you bring in to the house, and your expenses. Consider looking for areas where you can reduce unnecessary costs and make a few changes if you’re spending more than you make. For example, maybe you can take that step you always talked about and cut your cable or stop using food delivery services and cook at home instead. Once you have built your budget, make sure you review it at the end of each month to stay on track. Take note though, a budget isn’t a dream scenario – use real numbers and take action based on what you learn.

2. Establish or strengthen your emergency fund

Unforeseen events happen. Whether your hot water tank goes on the fritz or you unexpectedly lose your job, unwanted expenses can strike when you least expect them. Saving and protecting emergency funds are a great way to hedge your bets against these unforeseen circumstances and avoid the financial impact and stress that can occur. A solid budget includes dedicating some of your income to an emergency fund. Open a separate savings account, ideally one with a decent interest rate and low or no fees, and start automatically contributing what you can. Even $40 every two weeks can net you $1,000 in savings within a year – the key is to consistently save the amount you are comfortable saving, no matter how small.

3. Defer payments

You are not alone in feeling the financial stress of COVID-19. Many Albertans are facing unprecedented challenges, which has made meeting financial obligations like paying mortgages, utilities, and other monthly expenses more difficult. Fortunately, many businesses, banks, service providers and municipalities recognize this and are providing payment deferrals for up to six months to help ease your financial stress. If you’ve reviewed your budget and removed all unnecessary spending, your next step is to identify bills that may qualify for a deferral. Try and pinpoint the smallest bills you can defer that will help you balance your budget.  Just remember that deferred payments still have to be paid – they do not cancel or eliminate the amount owed, but instead put them on hold to give you time to either grow your income, or further reduce your expenses.

4. Consider using an investment adviser or planner

Sometimes calling in an expert is a necessary step to help reduce the stress you might be feeling about your financial future. If you have investments, you are not alone in worrying about the volatility of the stock markets and the rapid changes in your portfolio. Making an appointment with a registered financial adviser or planner and seeking their knowledge and guidance can be a great way to review your investment portfolio against your financial plan, ensure you’re staying on track with your goals, and make any adjustments as needed. Learn how to ask the right questions and check the registration of your investment adviser by searching “Choosing the right financial adviser” on CheckFirst.ca.

5. Beware of “get rich quick” opportunities

Current economic conditions create a breeding ground for fraudsters looking to capitalize on the fear and vulnerability of hard-working people trying to make ends meet. Fraudsters use economic uncertainties and current trends to sell COVID-related investments, forex trading work-from-home opportunities, and too-good-to-be-true offers with the sole purpose of stealing your money quickly and efficiently. If you’re approached with a red flag of fraud such as an investment opportunity with the promise of significant returns with little to no risk, you could be dealing with a potentially fraudulent investment that could make your financial situation worse. Don’t make rash decisions with your money. Learn more about the red flags to be wary of, and always check the registration and disciplinary history of the individual or firm offering you any investment at CheckFirst.ca

Financial stress is an overwhelming reality for many households across Alberta. Take control of your financial security and relieve stress by taking action through these five steps. Visit CheckFirst.ca for free, unbiased resources to empower you through every step of your investment journey, detours and all.

[1] Seto, Steve, Financial stress biggest concern for Albertans during pandemic: survey, 660 News, Jul. 13 2020.

Buying in the dip: What to consider when investing during an economic downturn

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You may hear the investing motto “buy the dip” being used a lot these days. This phrase refers to looking at economic downturns as lucrative investment opportunities – one that can bring you significant gains by buying investments at reduced prices. While the idea behind the motto certainly seems exciting for investors, the truth is that there are many considerations and risks to weigh before buying the dip in today’s economic climate. If you are thinking of investing during this time, consider the following beforehand to ensure you make wise decisions that meet your financial goals.

 

Have you considered whether the money you invest is money you can afford to lose?

Many Albertans are impacted by the economic downturn in their immediate day-to-day lives with reduced working hours, less income and even job loss. Over the long-term, this may affect current retirement accounts and future retirees’ ability to save. If you are looking to invest money with the hope of covering your bills or building back your retirement fund quickly, you could be setting yourself up for unsuitable investments and even potentially fraud. Review your current financial situation against your financial plan and consider whether the money you want to invest is money you can afford to lose, should the investment not turn out as expected.

 

Are you in the right head space to be investing?

Emotional investing spurred on from fear of missing out or not having enough money to meet your needs is dangerous as it can quickly expose you to unsuitable investments and fraudsters. Removing the emotional component from investing is hard, but by analyzing the investment against your risk tolerance (how willing and comfortable you are to the risk of losing your money on an investment), the risks of the investment, your financial plan and investment strategy can help you see the opportunity clearly and determine if it is right for you.

 

Have you considered the significant market risks?

We are living through unprecedented times. Rapid market volatility over the past few months has resulted in some of the sharpest declines and gains in the history of many stocks and indexes. While governments worldwide try to stem the impacts of COVID-19, the fact remains that no one knows what the market will look like tomorrow or over the next while. The investment world is full of speculation on when and how things will turn around. With this in mind, make sure you research the investment you are considering. Check to make sure the person selling the investment opportunity is registered to do so; investigate the validity of the product, solution or service that you are considering investing in; understand what the opportunity is offering; and, ensure you are comfortable with its risks.

 

Have you considered whether the investment opportunity you’re interested in is fraudulent?

When it comes to economic downturns, many fraudsters capitalize on the uncertainty, fear and financial strain that people experience to gain their trust and then to sell them false investments. Watch out for red flags. Anyone offering you an investment opportunity with the promise of significant returns with little to no risk is a major cause for concern. If it sounds too good to be true, it probably is. Make sure you always check the registration and disciplinary history of the individual or firm offering you the investment at CheckFirst.ca or call the Alberta Securities Commission at 1-877-355-4488.

This global economic downturn is bringing a lot of uncertainty and panic. While mottos like “buy the dip” seek to bring a positive outcome, you should never let fear or the expectations of great returns cloud the proper assessment of any investment opportunity. By taking deliberate actions with your investments, based on your risk tolerance and research, you can stay true to your financial plan and navigate the uncertainty of today’s investing market.