MYTH BUSTING: ‘I DON’T KNOW ENOUGH TO INVEST ON MY OWN’
SECOND IN A FOUR-PART SERIES ON LONG-TERM INVESTING Many would-be investors mistakenly believe they lack the knowledge to invest on their own, sidelining their hard-earned dollars from productive investments. The fact is, almost anyone can become an online investor, and there’s a very small learning curve.
“We’re finding that some people feel they lack investment awareness and that others have basic understanding but don’t feel they have the knowledge to invest online,” says Jeff Beck, associate vice-president, strategy and marketing, at TD Direct Investing. “That’s a shame, because if there’s one area in life that people should develop a basic understanding, it’s financial literacy: how to invest, and how the markets work.”
A recent report from TD reveals that, among Canadian millennials surveyed, 40 per cent said they avoided self-directed investing because they lacked financial knowledge, while 24 per cent said they were confused by navigating tools. Canadians in general responded in kind: 35 per cent said they lacked financial knowledge and 18 per cent cited confusion with navigating tools.
“The important thing to remember about online investing is that you’re never on your own,” says Beck. “With TD Direct Investing we offer a wealth of online educational tools and support for all investors, regardless of their level of knowledge — and those tools can help you to become the investor you want to be. TV shows and movies like to throw around a lot of buzzwords and terminology to make the investing world seem complicated and esoteric. We help investors cut through that barrier.”
TD offers a broad range of educational material, including online articles, more than 100 different webinars, video tutorials and even online master classes in which investors can communicate directly and interactively with an instructor. The information covered ranges from broad and general investment information, such as how to get started in investing with an automated savings plan, to more complex subjects, such as how to accurately read stock charts.
“The goal is to make you feel more confident in your ability to invest online,” says Beck. “Some of the online tools we offer include screeners, such as a stock screener that helps investors select a portfolio that they can be comfortable with and that will help them achieve their personal goals. You can zero in on the securities that most suit your investment profile, interests and your capacity for risk.”
He notes that a pervasive myth about investing involves the notion that online investors simply don’t have the information they need to succeed against savvy professional investors.
“With an infinite amount of online sources and social media, everyone now has access to the same information,” says Beck. “You can watch Money Talk on BNN and CTV to keep abreast of what’s going on in the market and to follow different financial and economic trends. It doesn’t require much time and effort to conduct your own research and get the information you need to make smart investing decisions. Everybody gets the same information at the same time.”
Mastering the online tools required to place an order is a relatively simple process — and it’s becoming simpler. A team of programmers and designers is constantly working with user feedback to make online investing easier and to reduce any friction between the platform and the investor. TD videos and educational resources offer guidance on each step of the process.
“We also offer the most advanced platform in Canada, Thinkorswim, which includes a practice account that allows you to sign up as an investor and test the waters without using real money,” says Beck. “Start with some hypothetical investment capital, buy and sell securities and watch your portfolio’s performance work with real data against the actual market. You can test any number of strategies in a risk-free environment to perfect your investment strategy.”
A broad range of free information sources can also help investors hone their strategies. Beck likes online resources such as Investopedia, which answers a multitude of questions about investing, and Seeking Alpha, a crowd-sourced content service for financial markets. He’s also bullish on Yahoo Finance, which offers the option of creating a curated watch list that sends articles directly to the investor’s phone.
Beck vividly recalls the moment when he executed his first online investment.
“I know how a first-time online investor must feel,” he says. “I remember studying the platform carefully and making sure I had selected the right stock symbol. I was a little hesitant before pushing the Trade button, but the moment I committed the purchase I experienced a feeling of exhilaration and control. Since then, all of my investments have been exclusively self-directed.”
The important thing to remember about online investing is that you’re never on your own.