I met Garth Rustand several years ago before he started Investors Aid Co-Operative of Canada. He had worked in the financial services industry for over 10 years so he understood how the industry worked.
At the time I met him, he talked about consumers having a hard time understanding the complexities of investing in the market. He was particularly concerned that the vast majority of people investing in mutual funds do not understand that after subtracting the management fees, the average return tends to be much lower than expected.
A recent article in the Vancouver Sun talks about Rustand’s goal with his organization to “empower Canadians who want to cut costs and take greater control of their investments.” Clearly, some Canadians agree because the Co-operative already has about 600 members and partners like the Certified General Accountants of BC and Alberta.
We give the same message to investors. It is important to do your homework, ask questions, do research, so that you can be part of the decision. It is your money after all.
Rustand points to a couple of investing traps.
Real estate based securities. While Canadians are used to investing in their own homes, they need to be wary about investing too heavily in securities, based on real estate. Take a look at this information about investing in real estate.
Leverage. Again, Canadians are used to borrowing money to buy a home, but they should be very careful using borrowed money to invest in mutual funds or stocks. There is always risk involved and if they lose money on the investment, it will be much harder to pay off the loan.
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