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Investment Principles

The following ten investment principles are used to grade investment portfolios in our portfolio check report:

Principle #1: Establish consistent, realistic expectations and objectives.

An investment portfolio should reflect an investor's expectations about future returns in the capital markets as well as their own goals and objectives. Thus the expectations and objectives should not only be realistic but they should also be internally consistent. more>

 

Principle #2: Aim for the right average rate of return.

The asset mix (the balance between stocks, bonds and cash) in your portfolio should be determined based on the rate of return you require in order to reach important goals. more>

 

Principle #3: Understand the risk potential.

Investment policy decisions should be based on the individual’s investment goals which will determine an appropriate asset mix that is consistent with the client’s needs, risk tolerance and long term capital markets outlook. more>

 

Principle #4: Diversification.

As a general rule, in an equity portfolio, broad geographic diversification is a sensible way to reduce volatility (risk) and increase the average rate of return by taking advantage of investment opportunities outside of Canada. more>

 

Principle #5: Use the correct advice channel.

With so many options to choose from – and new ones springing up everyday – investors can be overwhelmed and confused into making poor decisions. A PortfolioCHECK™ report will cut through the endless marketing messages and help you make one of your most important investment decisions – the role you play in the implementation of your investment process. more>

 

Principle #6: Portfolio simplicity.

A well-diversified and simple investment portfolio is usually better than an equally well diversified but very complicated one. It is easier to monitor and to control the asset mix when the investment portfolio is straightforward. more>

 

Principle #7: Income tax efficiency.

For most investors, income tax is always going to be a large expense, so saving tax is one of your greatest opportunities to increase the size of your portfolio. more>

 

Principle #8: Reporting & benchmarking.

Without a benchmark to measure performance, you won't know if a drop in the value of the portfolio is normal and to be expected, or if the drop signals a serious problem that should be addressed before it gets worse. more>

 

Principle #9: Follow a planned investment strategy.

There are a number of different investment strategies that, if followed deliberately and consistently, are likely to produce a reasonable rate of return with a reasonable degree of risk. The most common reason that investors fail to reach their objectives, or become dissatisfied with portfolio performance, is the lack of a plan or an overall investment strategy. more>

 

Principle #10: Fees and commissions.

As an investor, you cannot control interest rates or the stock market, but you can control the amount of fees you pay. The first step to minimizing fees and commissions is to understand the amount of all of the fees you pay, including hidden fees. more>