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Lessons from Experienced Online Investors: Eliminate Emotion
TD Waterhouse and seasoned online investors share their experiences with the next generation of do-it-yourself investors
- Online investors say that DIY investing is more convenient, easier to learn than initially expected
- Majority of experienced online investors confident in ability to manage their portfolios
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TORONTO, Oct. 13, 2011 /CNW/ - A top tip for online investing success is 'look before you leap', according to experienced do-it-yourself (DIY) investors. The TD Waterhouse DIY Investor Poll found that 63 percent of Canada's online investors polled say the biggest lesson they've learned is to be prepared. Almost one-quarter (23%) say they bought a hot pick without doing sound research beforehand, two in ten (21%) say they started purchasing investments without having a defined plan, 10 percent say they bought when the market was at its peak and 9 percent say they reacted too quickly when the market dipped.
"Investors know the importance of planning ahead, but in the moment can be swayed by a new trend or react quickly to short-term volatility. The key is to have a plan and understand what you're investing in and how it aligns to your goal," says Kerry Peacock, Executive Vice President, TD Waterhouse Discount Brokerage.
Words of wisdom to the next generation of DIY investors
To stay on track to meet investing goals, more than half of online investors polled say the most important advice for those starting out is to start small and work your way up as your comfort and confidence level builds (54%), do your research before making investment decisions (53%) and be disciplined in your investment approach (50%).
"If you're just getting started, it's important to work with a company that supports your needs and helps you build your investing knowledge," says Orion Szathmary, Manager, New Investor Services, TD Waterhouse Discount Brokerage. "Take advantage of services offered by your online brokerage like free market research from experts and analysts, attend seminars and ask questions. As online investors, we're in control, but there's lots of additional support along the way."
What should DIY investors who are just getting started look for in an online brokerage? According to online investors surveyed, the top three most important features are competitive pricing (63%), the ability to track and manage portfolios in real time (57%) and fast and reliable platforms (49%). Additional features identified as important to online investors include a wide selection of products and investments (47%) and real-time access to global markets (44%).
While online investors say DIY investing is more convenient (39%), easier (39%) and they are more comfortable managing their portfolios than expected (39%), more than half (58%) say their biggest challenge is deciding what to invest in. "As an online investor you make the decisions yourself, but leveraging tools like investment screeners provided by your brokerage that can narrow down potential options by sector, geography, asset class and a number of other factors based on your criteria, can help to sort through the choices available and select investments that match your goals," adds Peacock.
Click with confidence
By gaining experience, online investors also gain confidence in their ability to manage their investments and work towards their goals. Ninety-four percent of online investors with six to ten years of experience say they are confident in their ability and knowledge of online investing, compared to 82 percent of online investors with five years' experience or less.
"There are a number of ways new do-it-yourself investors can gain confidence, in particular test driving a model portfolio and then starting small and working their way up gradually," says Szathmary. "TD Waterhouse also offers support from qualified investment representatives, 24 hours a day, 7 days a week in four languages. Just because you're engaging in do-it-yourself investing doesn't mean you're alone."
About the TD Waterhouse DIY Investor Poll
Results for the TD Waterhouse DIY Investor Poll were collected through a custom online survey conducted by Environics Research Group between September 23 - 30, 2011. A total of 1000 completed surveys were collected with Canadians 20-60 years of age who manage their investments through a direct (online) brokerage account.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (TD). TD is the sixth largest bank in North America by branches and serves approximately 20 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust, TD Insurance, and TD Auto Finance Canada; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking, including TD Bank, America's Most Convenient Bank, and TD Auto Finance U.S.; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 7 million online customers. TD had CDN$665 billion in assets on July 31, 2011. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
TD Waterhouse represents the products and services offered by TD Waterhouse Canada Inc. (Member - Canadian Investor Protection Fund), TD Waterhouse Private Investment Counsel Inc., TD Waterhouse Insurance Services Inc., TD Waterhouse Private Banking (offered by The Toronto-Dominion Bank) and TD Waterhouse Private Trust (offered by The Canada Trust Company).
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