Rankin Financial Planning Ltd. Copyright 2010 - 2011
No Written Plan - Treating Investments like a Part Time Job
A good portion of the public does not have a written financial plan that they follow. Investing must be like a business. You need to make sure your assets are managed in a systematic manner. This means you need to:

Develop a strategy to attain your goals

Manage assets in a disciplined manner

Set short-term and long-term objectives

Measure results against quantifiable goals

Let professionals manage your money

"To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insight, or inside information. What’s needed is a sound intellectual framework for decisions and the ability to keep emotions from corroding that framework."

Warren Buffett

Trying to Time the Markets - Chasing Investment Returns

While fleet-footed investors may be able to hop on and off the hot funds and come out ahead, by the time a firm trend is established in the minds of most investors, the easy money has been made and they're in danger of buying at the top. Whenever there's herding, even smart people get caught up. What's worse, the smartest people often lose the most money. The key is having a plan to follow so you don't get caught up in chasing the latest hot trend/fund.

"Many investors jump into and out of even the best funds as market conditions change, dramatically lowering their returns. It does little good to purchase the right stocks or funds if the next time the market trembles you find yourself scurrying to the safety of money market assets."

Jeremy J. Siegal

Not Having an Asset Allocation Strategy

Individual investors tend to put more emphasis on investment selection - how to pick specific stocks, bonds and mutual funds, than on any other aspects of the investment process. Every serious investor should have an asset allocation policy - a strategic, long-term framework that lays out a mix of investments with the balance of risk and return that’s right for the individual. This policy should be in place before any investment managers are hired.

"I believe it is critical not to be part of the herd when investing in financial markets. Just because most investors are moving in a particular direction doesn’t make it the best direction. In fact, often it has meant the opposite."

Jeffery Vinik

Emotionally Driven Investment Decisions

Taking an emotional approach, as opposed to a disciplined one, makes a significant difference to investment returns. When investors let their emotions guide their decisions, they end up chasing performance and subsequently buying high and selling low. Whether it's euphoria or anxiety, allowing emotions to seep into investment decisions can be costly. Instead, prudent investors should aim to have an unemotional approach, a mindset that can be achieved with solid due diligence, a disciplined investment plan and a sense of perspective. "We have no predictive abilities or control over global trends, natural disasters, political upheavals, currency fluctuations and devaluation, social unrest, bad weather or manic-depressive stock markets. But, we do have complete control over our own behaviour."

Michael Lee-Chin

Expecting a Manager Investment Style to Work All the Time

Even the most gifted investment managers, with their documented records of exceptional performance, endure periods when their approaches don’t work. When that happens, it’s not because the manager’s suddenly lost their touch, it’s because the market doesn’t favour that particular approach at that point in time. But one thing you usually do see is that when a really bad year comes around, the value style outperforms the growth style. "Whatever method you use to pick stocks or stock mutual funds, your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn’t the head but the stomach that determines the fate of the investor."

Peter Lynch

Not Utilizing an Advisor to Manage your Finances

You may be wondering how you will find the time to develop an investment plan, create an asset allocation strategy, select managers, monitor and evaluate results and accomplish all the other things this business of investing entails. For many investors, the solution has been to seek the help and expertise of an experienced, knowledgeable advisor.

Having an advisor to help you through all of these issues and tough times can increase your likelihood of reaching your goals. The aim is not to get rich quick but "to keep from getting poor quick".


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  Professional Designations
Glen Rankin  
CIM Canadian Investment Manager
PFP Personal Financial Planner
CFP Certified Financial Planner
FMA Financial Management Advisor
FCSI Fellow of the Canadian Securities Institute