Invest in yourself without risking your pension

(Photo: Martin Flamand)

You can invest some or all of your savings yourself. Keep in mind, however, that by choosing the second option, it will do you good to take a moment to think about the implications it could have on your pension.

A US study published last year by Dalbar shows that 70% of independent investors surveyed do not have a pension plan, while among investors who use a financial advisor, this proportion drops to 25%.

The survey also shows that nearly a third of self-managed investors don’t know how much money they need to save for an adequate retirement, three times higher than the proportion seen among advisor-assisted investors.

Finally, we learn that 18% of independent investors do not know how much money they have saved up to date for retirement. By comparison, only 7% of investors dealing with a financial advisor are unsure of the amounts already set aside for their retirement.

“This worries me because I’m not sure that all people who invest on their own have what it takes to make the right decisions,” said André Lacasse, financial planner at Lacasse Financial Services.

Fabien Major, financial planner at Assante Wealth Management, serves as a warning to investors who are fans of online brokerage apps that combine wealth and entertainment. “By mixing them, you get an explosive cocktail,” he says. It’s playing for your future.

“I believe that independent investments should be reserved for a certain amount that would not damage wealth and would not change life plans if lost,” he adds.

Hardbacon boss Julien Brault is particularly concerned about young investors who have opened a brokerage account for the first time in two years. “Many of them have never seen what an economic crisis is,” he notes.

He fears that if the markets plunge soon, these inexperienced investors will forget that the markets are cyclical and that, in theory, they will eventually go up.

“People understand the basic principle, but when a financial crisis lasts a long time, the market tires them,” he says. Result: These panicked investors sell at the wrong time, which can seriously hamper their retirement plan.

Reply to inquiry

Financial institutions deny that they offer services that could jeopardize customers’ retirement age if not used with care. Rather, they insist on the fact that they respond to the autonomy that their clients demand.

“Each client can set their own limits,” says Claude-Frédéric Robert, head of National Bank Direct Brokerage, while emphasizing the importance of providing educational content and improving the financial literacy of users.

“Our role is to support our customers in learning,” said Mark Girard, vice president and general manager of Desjardins Online Brokerage. “It all comes down to needs and preferences,” says Sabrina Della Fasia of BMO InvestorLine. If platforms continue to grow in popularity, it’s certainly because people want to have autonomy.

Resources to help you

There are many sources of information available to help you take your first steps in investing on your own or move on to the next step. Here are some of them that should interest you.

BOOKS

Smart investor
(Smart Investor), Benjamin Graham

“This book will never go out of style. This is about entrepreneurial type investing: if I buy securities in the stock market, it is because I understand why and under what circumstances I buy them,” says Fabien Major from Assante Wealth Management.

snowball effect
(Snowball: Warren Buffett and the Business of Life), Alice Schroeder

“It’s interesting to understand the field of investing, the mindset of a very established investor like Warren Buffett. And because it’s a biography, it reads like a novel. It’s a great introduction,” says Julien Brault of Hardbacon.

Other recommendations

Investing for dummies
(Eric Tyson and Tony Martin)

Invest in the stock market and get rich
(Bernard Mooney)

Online brokerage. A small guide for an independent investor
(Stefan Desjardins)

Zero to millionaire. Invest in the stock market without suffering
(from Nicolas Berube)

PODCASTS

Plan
Fabienne Major

Describes itself as “the first French-Canadian podcast” about financial planning. On the menu: portfolio management, as well as insurance, budgeting, taxes or retirement. It’s up to you to decide which episodes you like the most.

rational reminder
(in English)

The podcast is hosted by two portfolio managers from PWL, which has offices in Toronto, Ottawa, Waterloo and Montreal. Canadian advice for Canadian investors.

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