Thinking about investing yourself? Consider these tips before taking the risk
TORONTO -- More than one million Canadians opened a trading account in the first six months of 2020.
It may be due to the COVID-19 pandemic that people feel they have more time on their hands for "do it yourself" investing.
However, the Investment Industry Regulatory Organization of Canada (IIROC) warns that "do it yourself" investing is not for everyone and there are common mistakes that could cost you money.
"Clearly what we are seeing is that since the pandemic started there has been a significant uptick in people doing their own investing," Lucy Becker, the Vice-President of Public Affairs and Member Education Services with IIROC, said.
IIROC regulates 175 investment firms in Canada, including direct investing offered by Canada's big banks.
Becker said anyone doing their own investing needs to be sure they are comfortable managing their own money.
"It's natural that people think they will make money off a particular product, but more often than not they have to ask themselves, 'What can I afford to lose?'" Becker said.
Many investors opened trading accounts two years ago to buy marijuana stocks prior to the legalization in Canada.
This year many are buying stocks related to gold and gold mining companies.
Becker said whatever you're buying be cautious.
"At the end of the day it can cost you a lot of money if you jump into something that you really don't understand," Becker said.
Some common mistakes made by do-it-yourself investors include investing in complicated products and engaging in complex trading strategies.
Some investors may borrow from lines of credit or credit cards, let fees erode their investments and "bet the farm" and lose.
Becker said while do it yourself investing is a good strategy for many people, others may want to leave money management to a professional.
"If you are going to be a do it yourself investor, you are assuming the risks. If something does go wrong, you're the one who is actually in the driver's seat," Becker said.
Whether you invest yourself or pay someone to help you, keep track of your accounts carefully and make sure you know how much it's costing you to manage your money.
For more information on investing you can visit IIROC’s website.