"In a world of GLASS CEILING SMASHERS, [Golden Girl Finance Founders] Misner and McDonald are two blondes investing in total architectural overhaul." - Dolce Vita Magazine


How to avoid losing money as a newbie investor

November 18th, 2015 by

10 first steps to investment planning


Opening an investment account is relatively easy. What’s not so easy is how to proceed with investment planning, so you don’t immediately lose what’s in your account. So here’s my list of 10 basic investment and money management principles that it’s important to learn before you start trading.

First steps to investment planning

1. Understand the power of compounding. This is the principle that any earnings from an asset will in turn generate their own earnings. Compounding allows your original investment amount to grow faster when earnings are reinvested than when earnings are paid out.

2. Start early. The more years you have to invest, the more manageable your plan becomes. The longer you stick with your plan, the greater the chance your investments will match or exceed the longer-term returns of your benchmark. A longer timeframe will smooth out the short-term volatility of the market. It’s called “regression to the mean.”

3. Preserve your capital. Whatever the size of your investment portfolio, your biggest challenge is how to keep it from being nibbled to death by ducks. Capital has many enemies, but three of the biggest systemic ones are inflation, taxes, and macroeconomic forces.

4. Make it grow…efficiently. To preserve your wealth and keep it working and producing for you, you have to make those key decisions about your tolerance for risk and from there how to allocate those assets in the most tax-efficient way possible. Remember that “risk-free” really isn’t. Low-yielding investments like GICs, savings accounts, and government bonds will be eroded by taxes and inflation to the extent that you’ll actually be losing money every year.

5. Diversify your investments. It’s important to diversify assets over a number of classes (including fixed-income, equity, and alternative investments) using a variety of strategies, including hedge funds, venture capital, private offerings, tax shelters, and other vehicles for “accredited investors,” to ensure both capital preservation and tax-efficient growth to keep that income stream coming.

Be honest with yourself

6. Be realistic. Most of us tend to overestimate our capacity to deal with risk, investment volatility, and market losses, especially when we’re younger. Be realistic about your own tolerance for risk (and ignore what friends, neighbours, family, and hyper-Tweeting strangers say about their “successes” in the market – most exaggerate and many just outright lie). Then allocate your assets accordingly. If you have determined that you’re a conservative investor, for example, you’ll want to tilt your investments towards a more defensive allocation, with perhaps 60% to cash and fixed income, and 40% to equity. More aggressive investors might consider reversing that ratio.

7. Stay in it for the long haul. For saving and investing, the principle is the same. It’s all about staying in it for the long term. Over the long haul a $500 monthly contribution compounded monthly at a relatively conservative annual rate of 6% will grow to $500,000 in 30 years. I always recommend opening a Registered Retirement Savings Plan and a Tax-Free Savings Account. The reason is simple. In these plans, your money will compound tax-free.

8. Be flexible. Your life isn’t static, and your financial plan shouldn’t be either. Times change, your circumstances change – a family, a home, a better job – so your investment portfolio should adapt to your changing needs.

9. Know what you’re getting into. Don’t jump into investing without fully understanding what you are doing. Many novice investors will do just this, acting on something they heard from a friend or relative, or at the office, or even worse, over Twitter. This is the surest road to financial failure.

10. Get help. If you have a considerable nest-egg and you’re in doubt about where to go next, consult an independent financial planner, who will work with you every step of the way to create an investment plan that you understand and that will meet your financial goals.

Jul 26 2017 7:32pm

Business - Get Listed

Golden Girl Finance was designed for women to more effectively connect with the financial services community, national brands and local businesses of all types - supporting entrepreneurs, innovators and thought leaders. It's the modern way to engage with financially savvy females. Best of all, it's simple, easy to use, and your listing is completely free.

Create your profile and start engaging with the female demographic today.

Join Now →


Golden Girl Finance is a leader in financial digital media - the modern woman's guide to finance - making the discussion of money and investing real, relevant and relatable (and shockingly entertaining). With a voice that reaches millions of women across digital, print and television platforms, our goal is to engage, educate and empower women of all ages to take charge of their finances. We do not invest on readers' behalves nor offer personal advice. It is this unbiased and innovative financial literacy approach that our community values and trusts.

goldengirlfinance.com Worldwide:

Canada USA
A financial voice for women. Get Started Now.