No Hype - The Straight Goods on Investing Your Money

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Chapter 1

From No Hype – The Straight Goods on Investing Your Money, Second Edition by Gail Bebee Many would question whether the world needs another book on investing. So, by way of answering this very valid query, I’ll begin with the story of why I wrote No Hype—The Straight Goods on Investing Your Money, how it is different from the vast number of other books on investing and why you must read this book.

One day when I was in my mid-40s, after reading an article about how there won’t be enough money in the Canada Pension Plan to pay for baby boomer pensions, I realized that at some point in the foreseeable future I would retire from the working world and need an ongoing retirement income. At that point, I took a close look at our family’s savings, potential company pension benefits and government old age pension benefits. With the help of a financial planner, our family estimated how much money we would need to retire.

Like many other Canadians, every year my husband and I faithfully contributed to our Registered Retirement Savings Plans (RRSPs). This usually occurred during the annual RRSP marketing frenzy when our stockbroker called to remind us to contribute before the end of February to ensure we benefitted from the tax deduction. We then promptly forgot about our RRSPs and regular investing accounts unless the broker called. If we had spare money, we would buy a Canada Savings Bond (CSB) or whatever investment our broker recommended. I had no idea what kind of investment return our savings had delivered over the years. I wasn’t even sure why I had purchased many of the investments I owned. They were all recommendations made by my broker.

When I examined the individual investments inside our accounts, I found that we mainly owned mutual funds. So, I began to educate myself about mutual funds. I read the fund literature periodically sent by our broker and I perused the fund returns published in the newspaper. (This was before the era of online access to such information). What I found was disturbing. The main fund in my locked-in RRSP account was heavily invested in stocks of Latin American countries. At the time, such stocks were considered high risk, certainly not the best choice for a retirement account. I also discovered that our funds were not the top performers and had relatively high management expense fees compared to other funds of the same type. With a little digging, I found out why. Our funds were the best investment for our broker, not necessarily for us. The companies selling these funds provided the best sales commissions and ongoing fees to brokers.

With this new-found knowledge, I asked my broker to buy two funds that had performed well over the past several years. She did not encourage me to buy these funds. I eventually figured out why – these funds did not pay hefty sales commissions. Moreover, these funds did not pay ongoing fees to brokers to encourage them to keep their clients in the funds.

This incident was a wake up call.

I realized that our family needed to take ownership of our investments. We needed to make our own informed decisions about how to best invest our hard earned money.

And so my journey in search of how to invest successfully began.

I started to read the business section of our daily newspaper. I devoured books on investing. I searched for investing magazines at local bookstores. During my lunch hour, I frequented the library near my office and read the latest issues of the investing periodicals found in the reference section. Eventually, I even sub- scribed to some of them. I tuned into business television and became a regular viewer of such shows as Market Call and Moneyline. I surfed the Internet in search of the latest financial news and views.

Early in my investing education, I attended a meeting of an investing club sponsored by Canadian MoneySaver. I found members eager to share their investing knowledge with a rookie and ready to learn more. My membership has proved to be an invaluable part of my investing education.

As my knowledge increased, I realized that I should consider moving out of mutual funds and investing directly in stocks. To fully understand how stock investing worked, I enrolled in the Canadian Securities Course, one of the basic requirements to be a stockbroker. This was a challenging evening assignment after working all day at my regular job. However, I put in the study hours and completed the course with honours. With newly discovered confidence, I plunged into the world of stock investing. I resolved to do my own investment research and make my own investment decisions. I opened a discount brokerage account to eliminate the cost of the financial advisor I decided I no longer needed. I made my share of mistakes learning to buy and sell investments online. I bought some stocks and mutual funds that turned an excellent profit and others that were dogs. Over time, I gained a decent understanding of the art of investing and honed a straightforward approach to what it takes to invest successfully.

After retiring from corporate life, I had time to reflect on my investing career. What struck me was the amount of time I spent digging up basic, understandable, non-partisan information on areas of investing I wanted to know about. I realized there was a genuine need for a comprehensive primer on investing written for individual Canadians by a non-biased author. So, I set out to fill this gap.

No Hype – The Straight Goods on Investing Your Money is the book I couldn’t find when I began to seriously focus on investing. It is a distillation of the knowledge and experience I gained from my years in the investment trenches. It is a book for individual Canadian investors from the pen of an investment industry outsider with nothing to gain by promoting certain financial products or services.

Read No Hype – The Straight Goods on Investing Your Money from cover to cover for a broad overview on investing or taste it in small bites for information on a specific topic. In either case, you’ll benefit from my school of hard knocks investing experience. You’ll become acquainted with investing traps to avoid and find out how to save money on financial fees that eat into your profits. You’ll learn about a simple, low cost approach to investing. You’ll get the knowledge you need to cut through investment industry hype and profitably invest your heard-earned money.