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Steps to DIY Investing

Updated: Dec 2, 2021

Well we took the leap of DIY investing mid-January and it's been an interesting journey so far.

Now, I know why my dad always said,

"I don't trust anyone else with my money!"

Gosh, I hate when parents are right? But, when I'm the parent it's fantastic! Now I know how they feel! argh! Sometimes we have to learn the hard way.


Originally, we had spent all 14 years of our married life without a financial advisor, just investing on our own, putting small amounts of our RRSPs in GICs and some bank owned Mutual Funds. Then, we started setting up our investments with our Financial Advisor in the fall of 2019, hoping to learn some Financial Literacy surrounding investments but instead we ended up learning nothing except how to hand over our investments to someone else and move our mutual funds from the bank to another investment company with the same fees. Fast forward to 2020 when I had some extra time on my hands due to COVID and started reading Financial Literacy books and learning about how to invest and BAM! I knew we had made a mistake but didn't want to admit it because it would require some effort to transfer our money back into our own hands again.



But... we did it anyway.


The Process:

It took a lot longer than I anticipated to transfer over my funds so this process definitely required some patience. I am not a patient person. We had some hiccups along the way including having to be on the phone with Questrade for over 2 hours several times. This kind of worked for my husband who gets up at 5 am Alberta time (Questrade operates on EST) and was able to wait on hold and put his phone on speaker while on his 45 minute drive to work.

The option to receive a callback instead of waiting on hold, was only sometimes available and even with the call back option, it was still a 15 minute wait time for the customer agent to come on the line.

We are definitely not paying for the customer service!

Whereas with my financial advisor we received personal and prompt email replies, including over the weekend.




Ultimately, I would still much rather spend the time getting my investments set up so that I now have control and have lower fees. Now, that everything is set up, there doesn't seem to be any problems!


I'll admit when I first got my account ready to go, it was very intimidating at first glance. However there are many "how to" Youtube videos to walk you through the process of buying, selling and trading. The actual act of buying my ETFs was very easy.


I recently finished reading a really cool financial book called "Quit Like a Millionaire" by Kristy Shen and Bryce Leung and it reinforced some of the concepts that I had already learned about DIY investing.

It was one of the few financial books that made me cry in the first chapter. Maybe you won't cry. Bryce and Kristy are one of those few Canadians who have achieved Financial Independence and Retired early at the ripe age of 31.

This is their advice from their book about how to Invest in Indexes and as a nurse who likes to follow algorithms, this makes the process of deciding what to do a bit easier!


1. Pick an Equity Allocation:

You determine your own level of risk tolerance and whether you want to have 100% equity and 0% Bonds or 100% Bonds and 0% Equity or somewhere in the middle. Kristy and Bryce chose 60% Equity and 40% Bonds


2. Choose which Index to track:

There are plenty of different indexes out there to choose from. And you can choose more than just one. You can choose a Developing nations Index, a Canadian Index, an American Index etc. Keep in mind that the American market makes up a large percentage of the world's stock market compared to Canada. According to their book, Kristy and Bryce have their money invested in 33% EAFE (Europe Australasia and the Far East) 34% Canadian Market 33% USA Market


3. Pick your Investment Funds:

There are a variety of different companies that provide ETFs in the indexes that you have now chosen to track. For example, there are Canadian Banks like BMO or the TD Waterhouse Brokerage where you could purchase Index Investments from via ETFs or you can go through some discount brokerages such as Questrade or Wealthsimple to purchase ETFs, where you could purchase Indexes from companies such as Vanguard. You might be thinking, this is just like shopping, too many choices! If you are still undecided, Kristy and Bryce suggest,

"The cheapest one that tracks the index that you want"

(Quit like a Millionaire by Kristy Shen and Bryce Leung).


4. Rebalance:

Now time to rebalance so that your investments continue to follow the plan that you set out. Kristy and Bryce suggest only selling an asset when that asset’s allocation is above target. and remember that

"Rebalancing forces you to ignore your two major investing emotions: greed and fear"

(Quit Like a Millionaire by Kristy Shen and Bryce Leung).


Investing shouldn't have to be complicated especially when you have an simple plan. My current plan is transferring my money to Questrade each month for my children's RESP and then investing that money into the same ETF. It's the buying and holding method. Or like the phrase that I love,

"Index and Chill!"



Cons:

We lost approximately $1000 in Low Load fees between my account and my husband's account, by transferring out money from our Financial Advisor before the 2 year mark. We knew in advance that we were going to lose this amount. However, with our current circumstances, we knew that we were moving and I wanted to transfer our money while we were still in the country and had plenty of time to fix anything if we encountered any problems. I also thought that since the market was down, this was the time that I wanted to start buying these ETFs.


My husband has to keep reminding me that the goal isn't to check my account at Questrade everyday but maybe quarterly instead, otherwise you start feeling like you are on a roller coaster of emotions that comes with checking the stock market everyday. Remember those emotions that we mentioned earlier, fear and greed! We are prepared to "lose" money until the stock market comes out of a recession even if it takes up to 2 years which seems to be the historical recovery period for the stock market to recover from a recession.

Another motivating factor for switching was because I knew that if I didn't leave the safety net it would get too comfortable to just keep my money there. Also, I wanted to take advantage of experimenting and doing it myself so that when I taught financial literacy to my clients, I was already putting into practice my teaching. This is very important to me.

I'm not going to be perfect but striving to be consistent.

Now Go and Be Intentional!


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