Beat The Bank: Real Investor Stories And Lessons Learned - Part 3

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This is the last of a three email series in which your fellow Beat the Bank readers describe, in their own words, their personal experiences in switching to smarter investing and share lessons learned along the way. Today's email will offer investor views on "pluses & minuses" of making the switch and valuable tips for those considering doing the same.

Once again, my sincere thanks to those who shared their personal stories.  Learning about your experiences will encourage many others to Beat the Bank!

Most investors switched to "Do-It-Yourself" (DIY), "Assemble-It-Yourself" (AIY) or "Robo" investing while some found lower cost advisors or lower cost mutual fund providers. 

Pluses and Minuses

  • Being in complete control of our investments
  • Having the ability to know exactly what we own
  • Being able to chose what to buy/sell next
  • Knowing exactly what owning these stocks or bonds are costing us
  • Finding out about dividend and how important they are to your portfolio
  • Understanding what risk for us really means...I don't feel at risk to have a higher than suggested amount of stocks to bond ratio because I know that all the companies I own are good solid companies.  This versus owning mutual funds that had bonds from developing countries
  • finding out about ETFs
  • Overall, the ability to know, simply know, what our money is invested in and not have to listen to a sales pitch once per year whenever we asked questions"
  • There is no one else to blame but yourself if you make bad decisions
  • You have to decide what your end goal is.  For us it's passive investing in solid companies that pay dividends and invest a set amount twice per year.  It's easy to get caught up in the drama or hype from the media.  You have to stay firm in your belief.  But sometimes setting that goal and following it is hard to do.
  • One thing that I miss is the monthly contributions.  It's not as easy to purchase investments in a DIY account but it's not a deal breaker for me."

"Pluses: I sleep well at night knowing that my money is working hard for me, I also listen to personal finance podcasts and read personal finance books to keep myself updated, I pay lesser fees and get to keep more of my hard-earned money. I am now more aware of what the Wealth Builders and Wealth Killers are. Minus: nothing!"
"Pluses: major savings on the fees, Minuses: more personal time required as expected. Overall 100% happy."

Tips for Fellow Investors

"I have found that ETF equity investing is better for me than buying individual stocks."

"1) enrol in the "DRIP" programs and allow compounding to benefit you.  
2) think your plan through, know yourself and then stick with your plan.  Tweak it when life circumstances change, otherwise try to tune out the noise and the hype. 
3) this one is from various sources and keeps cropping up - do not expect average returns to occur yearly!  An "average return" appears to happen only a few times over a 40-year horizon; yearly returns are more likely to be above or below than at the average.
4) fees matter and their impacts are huge so don't underestimate them.  High fees (actually just the standard fees) on my mutual funds at the bank kept gains in my portfolio dismal, compared to what I've achieved through my DIY portfolio at an online brokerage."
"With your advice on page 172 / 173, I executed my first stock buying transaction, very carefully I would go through the steps one by one before I was comfortable with my first purchase. Over time I got more confident using the DIY approach. I now have a lot of good blue chip dividend paying stocks and a few ETF's tracking the US index. I am using the DRIP option for my dividends so I don't have to pay a commission cost for repurchasing."
"I know there are other online discount brokers and some may be better than my bank's. But using my bank's online brokerage helped me be confident switching to DIY/AIY."
"I would say that the most difficult part of DIY investing is opening an account. (Which is much easier nowadays). We are so proud that we did not panic in 2020 when the market started falling. Take the plunge, it 's the best decision you will ever make."
"The list of tips could be long as you well know. Most important are: develop a plan; start soon, even before you think you can; seek unbiased trustworthy advice; recognize the progress; accept setbacks; monitor and adapt, don't abandon. Investing is like any other skill: start small, start slow."
"Don't be afraid of experimenting by starting the move with a small amount. Take $1K and open an account somewhere - if you don't like it, close it, and try the next institution or approach."
"Get your toes wet" by opening a self-directed investment account. Perhaps try it with your next TFSA or RRSP contribution. Learn how to do buys, sells, rebalancing, and tracking of cost basis. Learn and grow."
"With so much noise on trading (cryptos, meme stocks, Robin Hood), it is more important than ever to know the winning strategy and stick to it. If you want to gamble, take a very small percentage (say 5%) and play, but shut the noise for the part that matters most and stay the course."
"I wish more women self invested and that we talked about it more to share ideas and make it feel less intimidating. I know this sounds terribly sexist, but what I love about shopping (comparing prices, reading reviews, the rush of getting a good deal) is so comparable to investing, I don't know why more women don't do it!"

"Personal finance is personal so don't compare yours with others and don't blindly copy what others are doing or what the newest fad is. Financial literacy is the name of the game so use your knowledge to propel your finances."
"One big tip that I would share is to interview at least 3 financial advisors if you are going to go that route.  Do NOT go with someone you know - not to any family members or friends in the business.  And by no means develop a personal friendship with that person as was my situation!!"
"It's only when I used your T-REX Score that I got a clear picture of the money I was losing and how much my portfolio would have grown if I had found out about this earlier."
"Make sure you and your partner both know what is happening with your money.  No one is going to care like you will!  If investing and numbers aren't your thing, make sure you're not getting hosed before you let a complete stranger put their hands around your money.  If you can, get at least some basic financial education."

"I read many books in order to get the information that I needed to understand and be comfortable in making the switch from an advisor to DIY investing.  These are the books that I recommend people read, in this order, if they want to make the switch:  Wealthing Like Rabbits, Beat the Bank, The Value of Simple."

I hope these insights provided by your fellow Beat the Bank readers help you on your investing journey. Feel free to forward this email to family and friends who might benefit. 

Once again, many, many thanks to all of you who took the time to share your stories!

If you have questions or comments just reply to this email. 

Investment Advice for Affluent Canadians

Some investors prefer ongoing advice. I offer full-service, ongoing investment advice and financial planning for clients with portfolios of $1 million+. My clients benefit from greatly reduced fees and portfolios which are tailored to match their personal objectives, time frame and risk tolerance. If my service might be of interest to you, just reply to this email and we can set up a call to discuss.


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