Getting started is better than waiting for perfection or never starting at all. When I first ventured into investing around 2009, I didn’t possess much knowledge, but I was eager to begin and gain some experience. It turned out to be a challenging start, marked by various mistakes that ultimately contributed to my growth as an investor.
Going to a big bank
My initial mistake was relying on my existing bank for investing and trading. While they have made improvements over time, the main issue remains their high commission and trading fees, which have remained unchanged to this day. Additionally, they lacked the research tools and sophisticated dashboards offered by other discount brokerages. When selecting an investment firm or brokerage, it’s essential to consider factors beyond just lower trading fees. Make a list of your preferences and requirements, and choose the option that best aligns with your criteria.
Picking non-Canadian stocks and dealing with exchange rates
As a Canadian investor purchasing U.S. stocks, it’s crucial to be aware of potential costs and losses due to fluctuations in the exchange rate between the Canadian dollar (CAD) and the U.S. dollar (USD). While diversifying into non-Canadian stocks can be advantageous, challenges arise when dealing with exchange rates, especially if transactions must be conducted in USD. Currency conversion fees are a significant consideration when acquiring U.S. stocks, as you’ll typically need to convert your Canadian dollars into U.S. dollars.
Emotional vs. Research Based Investing
I learned the importance of conducting thorough research when selecting stocks. While it’s common advice to invest in companies whose products and services you frequently use, I took this advice too literally and neglected comprehensive research. For example, I heavily relied on Yahoo for my online activities, assuming its popularity mirrored that of most people. However, this assumption led to poor investment decisions. Despite initially performing well, Yahoo’s stock suffered due to strategic missteps compared to competitors like Google. This experience taught me the importance of considering personal preferences alongside thorough research before making investment decisions.
In conclusion, embarking on the journey of investing often involves navigating through challenges and learning from mistakes along the way. By starting with determination and a willingness to learn, even the most daunting obstacles can become valuable lessons that contribute to one’s growth as an investor. Whether it’s avoiding high commission fees, considering currency conversion costs, or conducting thorough research before making investment decisions, each experience serves to refine and improve one’s approach to investing. Ultimately, the key lies in embracing the journey, learning from mistakes, and continuously striving for improvement in the pursuit of financial success.