Investing For Canadians All-in-One For Dummies

The all-encompassing guide to getting smart about the market

While investing is one of the smartest ways to become financially worry-free, making the decisions that get you there can be intimidating and overwhelming. Today's investors have a huge array of options open to them and sorting the wheat from the chaff?and the get-rich-quick Ponzi schemes from the real deal?is an exhausting process. Investing For Canadians All-in-One For Dummies takes the fear out of the complexity by providing you with a clear and honest overview of Canada's unique investing landscape?and shows you how to make it work for you.

Bringing together essential and jargon-free information from Investing For Canadians For Dummies, Stock Investing For Canadians For Dummies, Mutual Funds For Canadians For Dummies, Real Estate Investing For Canadians For Dummies, Day Trading For Canadians For Dummies, Cryptocurrency Investing For Dummies, and Investing in Silver & Gold For Dummies together in one convenient place, this rich resource is an arsenal of techniques and advice for guaranteeing you a secure and prosperous future.

• Develop and manage a portfolio
• Find investments that suit your income
• Get the latest information on tax laws
• Follow time-tested strategies
• Invest in gold, silver, and other precious metals

Introduction 1

About This Book 1

Foolish Assumptions 1

Icons Used in This Book 2

Beyond the Book 2

Where to Go from Here 3

Book 1: Entering the World of Investing 5

Chapter 1: Exploring Your Investment Choices 7

Getting Started with Investing 8

Building Wealth with Ownership Investments 9

Entering the stock market 10

Owning real estate 10

Running a small business 11

Generating Income from Lending Investments 12

Considering Cash Equivalents 14

Steering Clear of Futures and Options 15

Counting Out Collectibles 16

Chapter 2: Weighing Risks and Returns 19

Evaluating Risks 20

Market-value risk 21

Individual-investment risk 27

Purchasing-power risk (aka inflation risk) 30

Career risk 32

Analysing Returns 32

The components of total return 32

Savings, high-interest, and money market account returns 34

Bond returns 35

Stock returns 36

Real estate returns 39

Small-business returns 40

Considering Your Goals 41

Chapter 3: Getting Your Financial House in Order 43

Establishing an Emergency Reserve 43

Evaluating Your Debts 45

Conquering consumer debt 45

Mitigating your mortgage 46

Establishing Your Financial Goals 48

Tracking your savings rate 48

Determining your investment tastes 49

Funding Your Registered Retirement Savings Plan 51

Understanding RRSPs 51

Gaining tax benefits 52

Understanding deductions and contributions 52

Starting early for maximum profits 53

Taming Your Taxes in Non-Retirement Accounts 54

Figuring your tax bracket 54

Knowing what’s taxed and when to worry 56

Choosing the Right Investment Mix 58

Considering your age 59

Making the most of your investment options 59

Easing into risk: Dollar cost averaging 61

Treading Carefully When Investing for University or College 63

Making the most out of a Registered Education Savings Plan 64

Allocating university investments 66

Protecting Your Assets 66

Book 2: Investing in Stocks 69

Chapter 1: Gathering Information 71

Looking to Stock Exchanges for Answers 72

Grasping the Basics of Accounting and Economics 74

Accounting for taste and a whole lot more 74

Understanding how economics affects stocks 76

Staying on Top of Financial News 79

Figuring out what a company’s up to 80

Discovering what’s new with an industry 80

Knowing what’s happening with the economy 80

Seeing what politicians and government bureaucrats are doing 81

Checking for trends in society, culture, and entertainment 81

Reading and Understanding Stock Tables 82

52-week high 83

52-week low 83

Name and symbol 84

Dividend 84

Volume 84

Yield 86

P/E 86

Day last 87

Net change 87

Using News about Dividends 87

Looking at important dates 87

Understanding why certain dates matter 89

Evaluating or Ignoring Investment Tips 89

Chapter 2: Going for Brokers 91

Defining the Broker’s Role 91

Distinguishing between Full-Service and Discount Brokers 93

At your disposal: Full-service brokers 93

Just the basics: Discount brokers 95

Choosing a Broker 97

Discovering Various Types of Brokerage Accounts 98

Cash accounts 98

Margin accounts 99

Option accounts 99

Judging Brokers’ Recommendations 100

Understanding basic recommendations 100

Asking a few important questions 101

Robo-advisors and Fintech 103

High tech meets equity investing 103

Terminating bad investment decisions with artificial intelligence 104

Advantages of an inhuman touch 104

Exceeding standards 105

Checking Out Canadian Robo-advisors 106

Not just for millennials 107

Asset allocation: What is the robo-advisor investing your money in? 107

What to watch for 108

Fees 109

Putting it all together 110

Chapter 3: Investing for Long-Term Growth 111

Becoming a Value-Oriented Growth Investor 112

Surveying Handy Growth Stock Tips 113

Look for leaders in megatrends 114

Compare company growth to industry growth 114

Consider a company with a strong niche 115

Check out a company’s fundamentals 116

Evaluate a company’s management 116

Notice who’s buying and/or recommending a company’s stock 118

Make sure a company continues to do well 119

Heed investing lessons from history 121

Exploring Small Caps and Speculative Stocks 121

Knowing when to avoid IPOs 122

Making sure a small cap stock is making money 123

Analyzing small cap stocks before investing 123

Chapter 4: Investing for Income 125

Understanding Income Stocks Basics 126

Getting a grip on dividends 126

Recognizing who’s well-suited for income 127

Assessing the advantages of income stocks 127

Digging into the disadvantages of income stocks 128

Analysing Income Stocks 130

Pinpointing your needs first 130

Checking out yield 131

Looking at a stock’s payout ratio 133

Studying a company’s bond rating 134

Diversifying your stocks 135

Exploring Some Typical Income Stocks 135

Utilities 135

Real estate investment trusts (REITs) 136

Royalty trusts 138

Chapter 5: Using Accounting Basics to Choose Winning Stocks 139

Recognizing Value When You See It 140

Understanding different types of value 140

Putting the pieces together 142

Accounting for Value 144

Breaking down the balance sheet 144

Looking at the income statement 148

Tooling around with ratios 153

Book 3: Investing in Mutual Funds 157

Chapter 1: What is a Mutual Fund? 159

Beginning with Mutual Fund Basics 160

The Nitty-Gritty: How a Fund Makes You Money 162

Returns: What’s in it for you? 162

Returns as a percentage 164

How funds can make you rich 166

What mutual funds buy 167

Checking Out Types of Funds 167

Discovering Where to Buy Funds 168

Chapter 2: Buying and Selling Mutual Funds 171

A Few Reasons to Buy Funds 171

Offering safety in numbers: Public scrutiny and accountability 172

Putting your eggs in many baskets 175

Getting good returns from professional management 176

Making investing convenient 177

Investing without breaking the bank 177

Watching over your investment 178

Getting out your money if you need it 178

The Perils and Pitfalls of Funds 179

Excessive costs 179

Style drift: When managers get lost in the jungle 179

When bad managers attack 180

Vague explanations of poor performance 180

Prospectuses that don’t say enough 181

Too many funds and too few long-term results 182

Load versus No-Load: The Great Divide 182

Load funds: The comfort zone 183

No-load funds: The direct approach 184

Chapter 3: Paperwork and Your Rights 187

Signing Up 188

Filling in your account (or RRSP) application form 188

Getting confirmed 191

Prospectuses: Not Always Your Friend 191

You’ve been warned 192

More charges to look for 194

Introducing the Management Report of Fund Performance 195

Looking at what goes into an MRFP 195

Checking out an MRFP 197

Surveying Your Account Statement 200

Annual and Semi-Annual Financial Statements (or Annual Reports) 202

Chapter 4: Investing in Canadian Exchange-Traded Funds 205

Comparing Exchange-Traded Funds and Mutual Funds 206

The differences 206

The similarities 207

Choosing an Exchange-Traded Fund 208

Main types of ETFs 208

Bearish ETFs 212

Taking Note of Indexes 213

Chapter 5: Beyond Mutual Funds 217

The Good Old GIC: You Know Where You Sleep 218

Types of GICs 219

Finding the best rates 220

Checking out the benefits of GICs 221

Watching out for inflation 221

Bonds and Strip Bonds 222

Considering bond alternatives 223

Investing directly in bonds 223

Stocks: Thrills, Spills, and Twisted Wreckage 224

Going with index funds 224

Buying individual stocks 226

Taking a wilder ride with stock alternatives 227

Income Trusts: No Longer the Taxpayer’s Best Friend 228

Recalling income trust mania 228

Clamping down on income trusts 228

Considering investing in income trusts 229

Managed Products: A Fee Circus 230

Book 4: Investing in Precious Metals 233

Chapter 1: Beginning with the Benefits and Risks of Metals 235

Protecting Your Portfolio Against Inflation 235

Precious metals against the dollar 236

Diversification against all currencies 236

Seeing Benefits for Investors 237

Safe haven 237

Privacy 238

Inflation hedge 238

Dollar hedge 239

Confiscation protection 239

Liquidity 240

Portfolio diversification 240

Checking Out Benefits for Traders and Speculators 241

Supply and demand 241

Huge gains potential 242

Trading versus speculating 243

The benefits of speculating 243

Recognizing the Risks of Precious Metals 244

Distinguishing types of risk 244

Minimizing your risk 248

Risk management tools 251

Weighing risk against return 252

Chapter 2: Going for the Gold 253

Gold: The Ancient Metal of Kings 254

Reviewing Recent Trends in Gold 255

Explaining all the bull 255

Telling the tale of the tape: Gold versus other investments 256

Assuring gold’s success 258

Securing a Safe Haven from the Coming Storm 259

Comparing monetary and price inflation 259

Watching the dollar 260

Buying and owning gold 260

Checking Out the Gold Market 261

Gold market data and information 261

Industrial supply and demand 262

Investment demand 263

Central banks 264

Meeting a Few Gold Bugs 265

Digging into Other Gold Investing Resources 266

Chapter 3: Discovering the Secret of Silver 267

Understanding the Hybrid Potentials of Silver 267

Monetary uses for silver 268

Industrial uses for silver 268

Researching Silver 270

Sources of data 270

Sources of informed opinion 271

Owning Silver 271

Physical silver 271

Paper silver 272

Focusing on Silver’s Compelling Future 273

Looking at the Legends of Silver 274

Jerome Smith 274

Ted Butler 274

David Morgan 275

Book 5: Day Trading 277

Chapter 1: Waking Up to Day Trading 279

It’s All in a Day’s Work 280

Speculating, not hedging 281

Understanding zero-sum markets 281

Keeping the discipline: Closing out each night 282

Committing to Trading as a Business 283

Trading part-time: An okay idea if done right 283

Trading as a hobby: A bad idea 284

Working with a Small Number of Assets 285

Managing your positions 286

Focusing your attention 286

A Few Personality Traits of Successful Day Traders 287

Independence 287

Quick-wittedness 288

Decisiveness 289

What Day Trading is Not 289

It’s not investing 290

But it’s not gambling 290

It’s hardly guaranteed 291

But it’s not exactly dangerous 292

It’s not easy 292

But then again, neither are a lot of other worthwhile activities 293

Putting day trading success in perspective 293

Chapter 2: Making a Day Trade of It 295

Planning Your Trading Business 296

Setting your goals 296

Picking the markets 297

Fixing hours, vacation, and sick leave 298

Getting yourself set up 298

Investing in your business 299

Evaluating and revising your plan 299

Planning Your Trades 302

What do you want to trade? 303

How do you want to trade it? 303

Figuring out when to buy and when to sell 304

Setting profit goals 305

Setting limits on your trades 306

What if the trade goes wrong? 310

Closing Out Your Position 310

Swing trading: Holding for days 311

Position trading: Holding for weeks 311

Investing: Holding for months or years 311

Maxims and Clichés That Guide and Mislead Traders 312

Pigs get fat, hogs get slaughtered 312

In a bear market, the money returns to its rightful owners 313

The trend is your friend 313

Buy the rumour, sell the news 314

Cut your losses and ride your winners 314

You’re only as good as your last trade 315

Chapter 3: Signing Up for Asset Classes 317

What Makes a Good Day Trading Asset? 317

Liquidity 318

Volatility, standard deviation, and variance 319

Capital requirements 320

Marginability 320

Securities and How They Trade 321

Stocks 322

Bonds 328

Exchange traded funds (ETFs) 331

Cash and Currency 332

How currency trades 332

Where currency trades 333

How the Canadian dollar is traded 333

Commodities and How They Trade 333

Derivatives and How They Trade 334

Types of derivatives 334

Buying and selling derivatives 336

Chapter 4: Investing, Trading, and Gambling 339

Understanding Risk and Return 340

What is risk, anyway? 340

Getting rewarded for the risk you take 343

The magic of market efficiency 344

Defining Investing 346

Talking about Trading 346

Getting a Grip on Gambling 347

Managing the Risks of Day Trading 348

Chapter 5: Understanding Regulations 349

How Regulations Created Day Trading 350

Who Regulates What? 351

Brokerage Basics for Firm and Customer 354

Are you suitable for day trading? 354

Staying out of the money laundromat 355

Rules for day traders 356

Tax reporting 357

Hot Tips and Insider Trading 357

Taking on Partners 358

Book 6: Cryptocurrency Investing 359

Chapter 1: What is a Cryptocurrency? 361

Beginning with the Basics of Cryptocurrencies 362

The definition of money 362

Some cryptocurrency history 363

Key crypto benefits 363

Common crypto and blockchain myths 364

Risks 365

Gearing Up to Make Transactions 366

Wallets 366

Exchanges 366

Communities 367

Making a Plan Before You Jump In 368

Select your cryptos 368

Analyze, invest, and profit 369

Chapter 2: Why Invest in Cryptocurrencies? 371

Diversifying from Traditional Investments 372

Stocks 372

Bonds 374

Forex 375

Precious metals 377

Gaining Capital Appreciation 378

Historical returns 379

Huge growth potential 380

Increasing Income Potential 381

A bit about traditional dividends 382

The basics on crypto dividends 382

Fueling Ideological Empowerment 383

The economy of the future 383

Freedom from government control of currency 384

Help for the unbanked and underbanked 385

Chapter 3: Recognizing the Risks of Cryptocurrencies 387

Reviewing Cryptocurrency Returns 388

Capital gains (or losses) 388

Income 388

Risk: Flipping the Other Side of the Coin 389

Glimpsing Cryptocurrencies’ Reward versus Risk 390

Digging into Different Kinds of Risk 391

Crypto hype risk 391

Security risk 392

Volatility risk 394

Liquidity risk 394

Vanishing risk 395

Regulation risk 396

Tax risk 397

Exploring Risk Management Methods 397

Build your emergency fund first 399

Be patient 399

Diversify outside and inside your cryptocurrency portfolio 401

Chapter 4: How Cryptocurrencies Work 403

Explaining Basic Terms in the Cryptocurrency Process 403

Cryptography 405

Nodes 406

Mining 406

Proof-of-work 407

Proof-of-stake 407

Proof-of-importance 408

Transactions: Putting it all together 408

Cruising through Other Important Crypto Concepts 409

Adaptive scaling 409

Decentralization 409

Harvesting 409

Open source 410

Public ledger 410

Smart contracts 410

Stick a Fork in It: Digging into Cryptocurrency Forks 411

What is a fork, and why do forks happen? 411

Hard forks and soft forks 412

Free money on forks 413

Book 7: Investing in Real Estate 415

Chapter 1: Thinking about Real Estate 417

Investigating Real Estate Investing 418

Discovering the opportunities 418

Considering alternatives 421

Figuring Out Whether You’re Right for Real Estate Investing 423

Determining how much you can invest 424

Assessing your risk tolerance 424

Getting into Real Estate Investing 426

Knowing your needs 426

Keeping your goals in mind 427

Understanding your limitations 427

Looking for locations 428

Fitting Real Estate into a Financial Plan 430

Considering when to sell 430

Planning for retirement 431

Wills and (real) estate planning 431

Chapter 2: Exploring Real Estate Investments 433

Homing In on Residential Properties 434

Investing begins at home 434

Renting a suite, paying a mortgage 435

Renovating for fun and profit 438

Owning second homes and cottages 439

Securing Commercial and Industrial Properties 440

Assessing classes 441

Assessing liquidity 443

Weighing Condos as an Investment 445

Investing in residential condos 446

Investing in commercial condos 447

Investing in hotel condos 447

Dreaming of Recreational Properties 448

Cottages and cabins 449

Fractional ownership 449

Resorts by the suite 450

Developing a Taste for Raw Land 450

Staking your claim 451

Goin’ country or swingin’ in the city 451

Banking on land 452

Deciding to build 452

Howdy, Partners: Buying into Syndicates 453

Gaining strength in numbers 455

Turning to the crowd 455

Knowing the risks 455

Researching Real Estate Investment Trusts 456

Trusted alternatives 456

Reading financial statements 457

Chapter 3: Establishing Your Investment Strategy 459

Studying Market Cycles 459

The real estate cycle 460

Factors affecting market conditions 462

Knowing the Market, Knowing Yourself 465

Taking stock of your skills 466

Gauging the market’s future — and yours 468

Selecting an Investment Type 469

Investing with intent 470

Lapping up liquidity 470

Staying strong in soft times 471

Doing your research 471

Selecting Advisers 472

Before you begin: The criteria 473

The real estate agent 475

The lawyer 476

The appraiser 477

The accountant 477

The financial planner 478

Other professional advice 479

Chapter 4: Pulling Together the Cash: Assessing Your Resources 481

Assessing Your Financial Situation 482

Identifying Resources 483

Liquid: Savings 484

Illiquid: Long-term investments 485

Vaporous: Friends and acquaintances 487

Banking on family 488

Working with Professional Financial Partners 492

Squaring accounts 493

Recognizing danger 494

Optimizing Saving Strategies and Leverage 494

Assembling a war chest 495

Weighing the opportunities and risks of leveraging 497

Chapter 5: Scouting Properties: Where to Look and What to Look For 499

Assessing Current Market Cycles 500

Research: Doing your homework 500

Analysis without paralysis: Tallying the variables 505

The decision: Trust your gut 506

X Marks the Spot: Identifying a Target Market 506

Separating the fads from the fundamentals 507

Getting to know markets and neighbourhoods 508

Honing your vision 510

Consulting the locals 512

Selecting a Property 512

Home sweet home 513

Location, location, location 516

Amenities and services 517

Looking to the future 518

Identifying the Types of Land Ownership 519

Holding freely 519

Holding with limits 520

Knowing That a Property’s Right for You 521

Checking Out Even More Resources for Property Information 522

Government agencies 522

Real estate brokerages and boards 523

Financial institutions 524

Real estate consultants 525

Owners’ associations 525

Builders’ associations 526

Provincial land registries 527

Property assessment offices 527

City hall 528

Court records 528

Index 529

Tony Martin, Eric Tyson, Andrew Dagys, Annie Logue, Andrew Bell, Matthew Elder, Douglas Gray, Peter Mitham, Brian Borzykowski, Kiana Danial, Paul Mladjenovic