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Investments: Always do your homework

In these days of low interest rates, it may be an excellent time to pull the trigger on a new truck. In the all-important world of cash flow, these rates can make such a major capital investment an affordable reality. If you are thinking of...


In these days of low interest rates, it may be an excellent time to pull the trigger on a new truck. In the all-important world of cash flow, these rates can make such a major capital investment an affordable reality. If you are thinking of making the move, and if you’re financing the purchase, do yourself a favour and shop around for a finance program that fits your needs. You don’t have to accept the first number they throw at you. Shop around and make sure you’ve done your homework.

While a welcome sign of the times for many, low interest rates are causing havoc for the retirees of the world. Since the days of the defined benefit retirement plans are few and far between, many people have moved their self-directed investment portfolios to the greener pastures of the stock market.

More specifically, stocks that pay dividends are all the rage at the moment. Some of the larger blue chips will pay you handsomely to hold their shares. It’s not unusual for oil producers pay north of 5% – a healthy return, for sure. But buyer beware; do your homework before you jump in. If a company is paying out dividends that are higher than its cash flow per share, chances are that big fat juicy dividend won’t be sustainable. Eventually it will catch up to them and that will be reflected in the share price.

At this point, if you’re still reading this column, you have at least some interest in how your investments are being handled. There are some great financial advisors out there that can customize an investment plan that’s right for you.

Again, do your homework. You need to be comfortable with that person. Do they understand your risk tolerance? Do their investment recommendations meet your goals? More importantly, can you sleep at night?

If you do decide to sign on with a financial advisor, do yourself a favour. Take a proactive role in researching his or her recommendations. There have been some horror stories of people seeing their portfolios decimated by poor decisions, usually through investing in risky, unproven equities.

There’s a great Web site that will help the average Joe or Joanne find out what the experts say about most TSX- or NYSE-listed stocks. Go to www.stockchase.com and you’ll see their opinions and top recommendations. Most of this information is summarized and posted daily from interviews conducted on the BNN channel.

Oh, and if you haven’t read The Wealthy Barber, go buy a copy or two. That may be the best investment advice you’ll ever get.


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