"Investing can feel like riding a roller coaster at times. I believe our biggest enemy when it

Could you explain to us a little bit about why Investing feels like a Roller Coaster Ride?

Investing can feel like riding a rollercoaster at times. I believe our biggest enemy when it comes to investing is ourselves. We have small panic attacks when it comes to investing. When everything is going up, everyone feels amazing. The minute your investments come down a bit, we panic. Remember in 2008, when we had the financial crisis? The world panicked, and many people sold their investments because their emotions told them to do so. But had they held onto their investments for a few years, they would seen it all rebounded.

Your investments should always be goal oriented. If the money you are saving is for short term, for 2 to 3 years, then you should not be investing aggressively trying to get growth. The money should be saved in a conservative portfolio. In the event a financial crisis happens, you don’t have the time for the money to rebound. The amount of risk you are taking should be directly propositional to the time horizon of your money. The longer the time horizon for saving, the more risk you can afford.

Your investments should be based on your time horizon and your lifegoals. There’s two types of risks when it comes to investing: Systematic risk and Unsystematic risk. Systematic risk is the risk that’s inherent in investing. It’s linked to the day-to-day fluctuations of the stock market, and out of our control.

On the other hand, unsystematic risk is risk we can control in investing. Unsystematic risk can be reduced by diversification. You should be investing in different geographical locations and industries across various companies. When I look at people’s portfolios, one of the major flaws is the lack of diversification. Even if investing is like a roller coaster, we can still control a lot of financial downturn.

When it comes to Toronto, it is very hot in real estate investing. So what is your take on real estate?

If your intention is to live in a real estate property for a very long time, then I do believe owning is a great idea because you don’t need to worry about a market crash. What concerns me are people who buy real estate with the intention of selling it within a short period of time to buy something else, hoping for a large increase in their property value. However, what happens if there’s a housing crash? I am also especially when people over-extend themselves on financing. Interest rates are on the rise, and it will bring financial stress to many Canadians as rates rise over the next few years.

I cannot predict the housing market in real estate. But it’s no different than investing in the stock market, it goes up and down, and it’s always a good idea to diversify your investments in a home and in the stock market.

What are your 3 book recommendations?

Open by Andre Agassi

The power of habit by Charles Duhigg

Reach stacey at:

http://www.staceyhe.com/

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