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This newsletter is courtesy of Terry Fay and RetirementByDesign.ca. Please remember that while strategies outlined within this newsletter may be appropriate for some investors, you should always consult a financial advisor to determine if they are appropriate for you.
Sincerely,
Terry
Hello
:
It’s hard to believe that we are quickly approaching the Christmas Holidays and New Years.
The New Year is always a time when we make new resolutions or make the same resolutions, again, as we have in prior years. I hope you made progress in 2004.
Lucie and I would like to wish you and your family a very Merry Christmas and a Happy New Year.
We will be away on Vacation starting January 3rd returning January 17th 2005.
December 31, 2004 is the deadline to roll your RRSPs into a RRIF if you turned 69 in 2004.
March 1, 2005 is the deadline to make your RRSP contribution. Maximum contribution is $15,500. As in other years we can provide loans at prime interest rates. I look forward to helping you and your friends plan their financial future.
HOW
PSYCHOLOGY AFFECTS YOUR INVESTMENT PROGRAM……
AND WHAT TO DO ABOUT IT
by Terry Fay
Most individual investors, no matter how knowledgeable or experienced, eventually fall prey to psychologically induced biases that cloud their judgement and result in poor investment decisions.
None of us want to admit to being irrational. But human beings have emotions, and it is extremely difficult to keep emotions from playing havoc with your investment program. Rational investing behaviour often runs counter to deep psychological tendencies. As well, human beings generally lack the cognitive ability to accurately measure risks and rewards. Most people are simply not wired to fully understand probabilities.
Although an investor may start out with the best of intentions following a carefully formulated investment plan, emotions, misconceptions and irrational beliefs can lead to poor decisions and derail the strategy.
8 Common Investing Mistakes - Click here to read on...
Take our RATIONAL INVESTOR QUIZ.
Are You a Rational Investor?
1.You are about to buy a toaster for $50, when a friend tells you the same toaster is available at a store about 10 minutes away for $40. You drive to the second store. A week later, you are about to purchase a car for $25,000, and a friend tells you the same car is available at a dealer about 10 minutes away for $24,990. Do you
a. Drive to the second dealership
b. Buy the car at the first dealership
2. When you go on vacation are you more concerned about the risks of:
a. Flying in an airplane
b. Going on a driving trip
3. You purchase shares of Prospect Co. at $40. A week later, some bad news about the company is released which will almost certainly have negative long-term consequences for the company and the shares drop 10%. You
a. Sell your shares at $36.
b. Hold the shares in the hopes that the price will rebound and you’ll at least break even.
4. Are you a better than average driver?
a. Yes
b. No
5. Do you sometimes have a feeling that you know what the stock market is oing to do on a given day?
a. Yes, sometimes
b. No, never
All you really need to know is that we are committed to helping our clients achieve financial security and peace of mind.
Our Mission: Enhancing peoples lives by creating a positive life vision and the money to support it through our unique approach to financial planning.
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Mutual Fund Products Offered Through Dundee Securities Corporation.
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