If you enjoy investing and are wondering how to get better at it, follow our one-month mentor program for intermediate investors.
Weeks ago, we ran an investing contest. The winners were classified in to three categories: advanced, intermediate and beginner.
At the beginning of May, the winner of our intermediate category, who can be identified only as Rob from St. John’s, sat down with his mentor, Warren MacKenzie for a quick chat, followed by a live, public, online discussion. You can review the discussion below.
Rob from St. John's is the winner of our investing contest in the intermediate category
Mr. MacKenzie is the founder of Second Opinion Investor Services Inc. He is a CA, CFP and CIMA (Certified Investment Management Analyst), the author of The Unbiased Advisor and co-author of New Rules for Retirement. Click here to find out more about Mr. MacKenzie and his intermediate investor learning program.
When you're finished reading the first week's discussion below, you can read the second week's discussion here: Week 2: Intermediate investor discussion
Week one discussion
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Sonali Verma, Globe Investor: Hello, everyone. Hope you had a good lunch. Today, we're joined by the winner of our investing contest in the intermediate category, Rob from St. John's, and his mentor, Warren MacKenzie. Thank you both for taking the time to do this.
Let me start by asking you to tell us a bit about yourself, Rob.
Rob: My wife and I are in our early 50s. At the moment we have two small investments, but most of our money is in R.R.S.P.s. We are now beginning to get concerned about our retirement so we are looking to invest in the market, but with the recent downturn, we are worried about which way to proceed.
Sonali: So, you're mostly thinking about your retirement. Tell us a bit about how much you know about investing.
Rob: I know the basics: asset allocation, mutual funds... I have a moderate knowledge based on what I have read, but not a great deal of practical use of trading stocks, or investment.
I would like Warren to give me some suggestions on investing. Also, how a person of my age should proceed with asset allocation.
Warren: Hi, Rob. There are several common ways to decide on an asset allocation. At the most basic level, asset allocation is the link between goals and objectives, and the risk and return in the capital markets.
One common way to set the asset allocation is do use a risk tolerance questionnaire. In theory, the more risk you think you can take – the riskier the portfolio.
We think this is the wrong approach because risk is an emotional thing and people do not know how much risk they can take until it is too late – and why take more risk than necessary to achieve your goals?
Another common way to determine asset allocation is the 100 – your age rule. If you are 55 you should have 55% in fixed income and 45% in equities.
We think the best approach to asset allocation is to do a financial plan and use the plan to determine what rate of return is required to achieve your goals – then base the asset mix on the rate of return you require.
Rob: What about the basic differences between ETFs and mutual funds?
