An Le, Carolina Tremblay, and Saleha Iftikhar, three National Bank Direct Brokerage employees with different backgrounds, share with us here the lessons learned on their own self-directed investing journey as well as some of the experiences their clients, friends, and family have gone through. Discover the main obstacles women can face and how to overcome these barriers to ultimately take control of their own investing.
“I don’t have enough knowledge”
In almost every scenario, starting something new and diving into the unknown can be unsettling. It can be tempting to put up a façade and pretend to know everything instead of admitting that there are things you don’t know. Fortunately, in this day and age, education comes in many forms and the journey often begins by asking questions. Remember: Everyone must start somewhere!
“It’s never too late to ask questions and there are no bad questions. It’s a learning curve for everybody and it’s a never-ending road,” says Saleha Iftikhar, Senior Account Manager, Distinctive Services at NBDB.
Whether you consider yourself a novice or advanced self-directed investor, education and financial literacy is key. Be curious and take the time to do your research. While there is plenty of information on the web, make sure to consult reliable sources like financial institutions’ websites, education centres and reliable blogs, financial publications, etc. Attending webinars and watching videos can also improve financial literacy by providing valuable information about strategies and products.
Education doesn’t have to begin when you decide to start investing. In fact, many school boards have added courses to their curriculum that teach the basics of personal finance to students, which will help future generations demystify the topic of money, savings, and investing. That said, parents can also play an important role in their children’s financial mindset. A child’s mind can be compared to a sponge that absorbs all the information around, including a parent’s financial behaviour. By encouraging open conversations about money in addition to being role models, parents can inspire their children to take charge of their personal finances early and instill good habits, giving them greater chances of success in the future.
“My daughter had a personal finance class in high school, and she had to build her own portfolio. She asked me what she should buy, and I guided her to do her own research and find what she wanted to invest in. That way, I encouraged my daughter to be independent and to think for herself,” proudly states Carolina Tremblay, Training Advisor at NBDB.
Some of the best life lessons come from personal experiences. Become a role model for your friends, family, and children. Share articles you read, webinars you attended, and discuss what you’ve learned. You might spark an interest in personal finance and help others around you in the long run.
“I don’t have enough time to invest in the stock market”
A lot of women think that “it takes a lot of time to invest in the stock market.” Not necessarily. Career and work, children, making sure your home is in order, or personal projects can keep you busy and investing might not fit in your list of priorities, but being a self-directed investor doesn’t need to be time consuming. Investors can decide how much time they allocate to their own finances. There are hands-off approaches that still allow exposure to the stock market such as using diversified funds like passive or actively managed ETFs or mutual funds.
On the topic of time, there is no positive correlation between the profits earned and the number of hours put into managing your investments. You don’t need to be a day trader to get good returns. You can invest and let your money work for you.
“Investing in the stock market is too risky for me”
Some people can have an aversion to risk when it comes to investing. Take the time to know yourself as an investor. What are your objectives? How much can you invest? How much money can you afford to lose? What are the lines you aren’t ready to cross? Your age, time before retirement, personal income, assets and debts are examples of factors that can influence your risk profile. “I know myself well. I know what type of investor I am, and where I’m not willing to go because of my age and my risk aversion. Someone else might like to buy and sell frequently, and that’s their strategy, but I wouldn’t do it. We all need to find our own ways,” says Carolina.
Identify your objectives and the timeframe you have to meet them. From what we’ve seen, women tend to set long-term goals and stick to a plan. Whenever you start feeling nervous or doubt, always remember your initial plan before making an investment decision. Often times rash decisions are also bad decisions.
Being true to your own risk tolerance and keeping the right mindset can help you make both informed and aligned decisions when choosing an investment product. Some investments yield good returns and involve less risk than you think. There are also trading strategies that can offer you more security; for example, placing limit orders and setting stop losses.
“I am not interested in finance”
It takes time to learn and understand personal finances. Starting requires an initial investment of personal time. You have to sit down and think about various investment goals. A bit of motivation is needed to begin your self-directed investing journey, but there is satisfaction in taking charge of your investments and seeing your money grow as you get closer to your short- and long-term life goals. No matter what your goal is, find your spark.
Define who you want to be. Are there some successful role models that can inspire you to get ahead financially? Emulate them. Define who you never want to be as well. Real life situations can also act as inspiration for both good and bad lessons. Either way, take the first step and embark on your own investing journey. With time, knowledge, and practice, you will create and accumulate positive experiences, and build trust and confidence in yourself. You will be hooked to the positive and powerful feeling when you sit in the driver’s seat with hands on the steering wheel as you take charge of your own finances.
Right now, your partner or a parent might be taking care of your finances, but with the increase in divorce rates and lifespan differences between men and women, there is a good chance you will need to take charge of your personal finances someday. Start to get a bit more involved in your financial decisions and ask questions about your investments: Where is your money invested? Is your RRSP maximized and how much can you afford to save? Why is your TFSA holding a particular type of investment? What is your risk profile? How much do you need to save for retirement or projects?
Eventually, you’ll have enough knowledge, interest, and confidence to manage your finances on your own. Becoming a self-directed investor and being exposed to the stock market is easier than you think. Start small and go one step at a time. “Not everything has to be perfect. Give yourself more credit. Life is a continuous learning process and there are always opportunities to learn and grow. That’s the whole point,” says An Le, Business Development Manager at NBDB.
Know yourself. Have your own voice. Talk to others and inspire women around you with your passion and your actions. Self-directed investing is not as complicated as it seems when you have the right tools to get started and keep learning.