I recently had the opportunity to present to Do-It-Yourself (DIY) investors at a recent conference event (YouTube, 30 min). I present some highlights below:
Are you taking a wholistic View of your portfolio? Many investors just look at the stocks and bonds in their trading account as the sum total of their investments. In reality, any cash, company stock owned, pension/retirement plans are all part of your total portfolio and should be included in the evaluation of your total return performance. Often you can direct what kind of investments your retirement/pension funds are in, and if you have company stock, note how it may overweight your portfolio to a particular sector/theme. You could consider using ETFs that diversify your exposures away from those positions. Check our whitepaper on how to build portfolios using ETFs.
Where are your investment returns coming from? Are you good at stock picking? How do you know? Try to find a broad index ETF for each of your stock picks, for Canadian Stocks, consider QCN, for US Stocks, consider QUU. Compare the returns in your trading software or on an internet resource site like Bloomberg.com. Did you outperform a relevant broad market ETF? If so great, if not, try to understand why. Some of the best investors I have ever met keep a journal of why they bought/sold/held/added/reduced a position. You may learn a lot about your own processes and will come closer to what institutional investors do as a matter of normal business. My Colleague Antony Chouinard discusses this further in his blog post with reference to a great chart from the CFA Institute.
What matters most when selecting an ETF? Charles Schwab published this U.S. study, highlighting what matters most to DIY Investors when selecting an ETF. The reasons are unsurprising! Cost is the top factor, and Mackenzie Investments is amongst the lowest cost ETF providers in Canada. Mackenzie Investments is seen by advisors as a top investment firm in Canada as per the Environics Advisor Perception Survey.