The five year rule says that you do not invest in the stock market money you will need within the next 5 years. Also, if you need to take money out of the market give yourself 5 years. Take out money when the market is relatively high. You never know when the top is, but you can tell if it is relatively high.
Another point is to never invest in anything that will not let you sleep at night. It is not worth it. If you are very cautious, then perhaps the best investment might be GICs. I know that they do not pay much, but if it is for 5 years or less it is guaranteed by the government. You will not lose money.
If you are young and are building an investment portfolio you can take a greater risk and it is probably silly not to be in the stock market. By all means buy ETFs or Mutual Funds if you are not willing to do any sort of research yourself. However, research does not necessary involve much. You can buy banks (if you are Canadian) or utilities (that produce power or are pipelines) or buy shares in the stores or business you deal with.
If you are retired you would think differently. If you cannot afford to lose the bit of money you have, go to GICs. Also, do not buy the fancy GICs like the ones with possibilities of higher rates because they are attached somehow to the stock market. Get absolutely plain vanilla ones that you will get some interest on that is guaranteed. If you cannot afford to lose your money, you probably cannot afford to lose any income your money can produce. It may be small, but it will be positive income.
Also, it is not only banks that sell GICs. The credit unions sell them also and they have the same guaranteed. Often the credit union GICs will give you a better interest rate. It may be worth your while to check them out.
Do not let any salesperson talk you into an investment. Sometimes it is hard to get what you want; especially if you have a savings account in a bank they will try to sell you a mutual fund. You can resist. Determine ahead of time what it is that you want. If it is a GIC just keep saying what it is that you want and ignore what the salesperson is saying. Remember they are salespeople. They are trained to sell.
You will get what you want if you just ignore the pitch and keep requesting what it is you want. You can also tell them that you want to think about it. Just take the information and leave.
On my other blog I wrote yesterday about IBI Group Inc. (TSX-IBG, OTC-IBIBF)... learn more. Tomorrow, I will write about PFB Corp. (TSX-PFB, OTC-PFBOF)... learn more on Friday, November 25, 2016 around 5 pm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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