from the Star that breaks down personal finance questions to help young Canadians gain more confidence and understanding around financial literacy.
Similar to your local farmer’s market, it’s where people are buying and selling things. The difference is that you’re not buying tangible items, but rather shares of companies.Often, Moorhouse receives questions from clients asking her what stocks they should buy, but she says “putting the cart before the horse” — meaning buying without understanding the product or their individual goals — isn’t advised.“It’s about laying all that out into what’s called an investment plan.
On the other hand if you choose to put fixed income or bonds into your portfolio, it lessens the volatility. While you’d be going with more safety, Moorhouse says that you may not receive as high returns.“It’s important to choose the right portfolio for you that is about your personal comfort level so it minimizes the risk of you making a decision that’s counterintuitive to your goal.”Moorhouse says she wouldn’t recommend beginners to invest in individual stocks.
That’s why Moorhouse says it’s a better idea for beginners to spread your money across different companies, rather than make it more complex for yourself by researching winning stocks and buying expensive shares.Looking into pre-built options that offer diversification in a simple way like index funds, mutual funds and exchange traded funds, Moorhouse says.