Good morning Dinks. I don’t know what it is about this time of the year, but it always makes me want to invest in something. Maybe it’s because the New Year brings new beginnings, maybe it’s because I reflect on my financial goals from the previous year or maybe it’s because I have tax season fever. I am not sure exactly what it is but I always want to buy investments at the beginning of the New Year.
Mutual funds are my favorite investments
As you know I am a huge fan of mutual funds. As a client and as a Financial Planner I absolutely love investing in mutual funds. I have colleagues who don’t own a single mutual fund because they prefer to buy individual securities such as stocks and bonds. I personally don’t like to do that and I don’t have the time to do the research.
I like mutual funds because they are well diversified investments. I can buy one fund and get access to several different investments, it’s great. I know some of you are thinking mutual funds? Why pay the fees? Although I am not a huge fan of paying bank fees I am OK with paying for a service and I think mutual funds are well worth the cost. That being said I don’t like buying mutual fund investments with a Management Expense Ratio (MER) of more than 2%.
These are my top 3 favorite investments:
Index mutual funds. Purchasing index mutual funds and other passive investments such as Exchange Traded Funds (ETFs) help keep overall portfolio costs down. I don’t mind paying fees for a service but that doesn’t mean I want to be taken advantage of and overpay.
Since index funds follow a market index they are not actively managed by a professional who is buying and selling individual securities. This helps keep the MER low.
Stocks with dividends. I am a huge fan of investing in stocks with dividends; I do it through dividend mutual funds. If you want to buy individual stocks and don’t need advice from a professional consider opening a self directed brokerage account.
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Foreign countries. I have been investing in foreign places for many years, but as a Canadian my international investments didn’t go farther than the United States. Before the market crash global investment opportunities were limited to mostly Asian countries such as China and Japan. However, since the market crash the investment trend of emerging markets opened up and the world of foreign investing saw a huge increase in opportunities.
If you want to invest in foreign countries you no longer need to invest in one geographic sector and you no longer have to invest in high risk equity, I love that. I currently invest in an emerging market bond fund that gives me exposure to countries like Brazil, India and Russia without the extreme risk.
Photo by zoonabar