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Level up! Rookie mistakes that have made us better investors.

Rookie Mistakes that have made us better investors

WRITTEN BY

ILLUSTRATION

MoneyTalk Staff

Veronica Park

Sometimes our fear of making a mistake can stop us from taking any action at all. But here's a secret: Everyone makes boneheaded money moves.

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Google "investing mistakes" and you will get a summary of stumbles from seasoned investing pros, on both Bay Street and Wall Street.

Source: TD Asset Management Inc. As of June 30, 2023

The 10-year return on the S&P 500 Index (June 2013 to June 2023) suggesting there's power in staying invested. Based in Canadian Dollars.

Source: Canada.ca

Average amount of RESP contribution per beneficiary in 2021. To receive the full Canada Education Savings Grant — which matches 20% of your contribution to a cap of $500 per year — you would need to contribute $2,500 annually.

Source: Canada Revenue Agency

Average unused TFSA contribution room Canadians had as of 2022. The contribution limit for 2023 is $6,500. Unused contribution room rolls forward. Learn more here.

INVESTING STRATEGY 1 of 3

INVESTING STRATEGY 2 of 3

Bruce Sellery

CEO, Credit Canada, on asking the right questions

"My rookie mistake was accepting a referral to a financial advisor without doing any due diligence. I was flattered that he took me on as a client. Over time it became clear to me there was a lot of sizzle, but very little steak. When I came to my senses and looked at my portfolio performance, I found my money had dramatically underperformed the benchmarks. And that I owned an energy trust product that I couldn’t sell without taking a big loss. While it was costly to untangle myself from this mess, I caught it early. It was an invaluable lesson and prompted me to take a much more active role in investing and gave me a better understanding of the futility of chasing the next big thing."

NUGWA HARUNA

Senior Client Education Instructor, TD Direct Investing, on knowing what you're buying

"I noticed all my colleagues were into buying stocks during the 'Weed Rush' era and I decided to jump on that bandwagon. I bought my first stock with no concrete plan in place, such as knowing my risk tolerance or how long my time horizon was. In less than three weeks, it had doubled in value. Believing I was now a stock market guru, I did a google search for 'The best penny stocks to buy,' which led me to a list of more stocks that I also purchased — with no additional research. Within a week, I saw all my previous gains plus my original investment wiped out. I sold my entire portfolio (at a loss). It took some time for me to regain my investing confidence."

DENICE LIN

Client Education Instructor, TD Direct Investing, on not rushing into things

"I hit the trifecta of rookie investing errors: no research, no assistance, and no objective. Inspired by friends and family, I bravely dove into investing headfirst. My initial rush led to an unforgettable catastrophe when I mistakenly entered the wrong ticker symbol on a purchase order. Despite the error, I clung to this rollercoaster journey, navigating it alone and praying it would make a rebound. Stubbornly I refused help, to avoid the shame and guilt, and I watched my funds slowly dwindle away until it was time to call it quits. The beginning of my investing journey was a wild ride."

DAVID SYKES

Chief Investment Officer, TD Asset Management, on selling your winners

"I vividly remember one of my early rookie mistakes. The problem was selling at the wrong time. What I mean by that is I bought a stock, the price went down, I panicked and sold it. I only owned it for three weeks! I came to realize that if you purchase securities, you have to understand why you're purchasing them. It sounds pretty basic but if you don't understand what your objective is, you can't possibly in the short term, predict the crosscurrents of a company's fundamentals, global macro-economic variables, geopolitical issues…the list goes on and on. For me, you need to understand why you're buying the security, what you're buying, and what you're trying to achieve."

NICOLE EWING

Director, Tax and Estate Planning, on keeping one eye on your tax strategy

"I could have kicked myself when I realized what I'd done. On a whim I purchased a U.S. dividend-paying security that I hoped would be a winner. It wasn't. And because I'd purchased it in my Tax-Free Savings Account, my losses were truly lost. So not only had I exposed myself to withholding tax (which is withheld by dividend-paying U.S. companies and remitted to the U.S. Internal Revenue Service), I was unable to use the losses against gains I'd made in my non-registered account. I now take a disciplined approach to investing and make sure I'm thinking through the tax implications, even in my tax-preferred accounts."

Learn more about registered and non-registered accounts here

MEAGAN HENRIQUES

Senior Client Education Instructor, TD Direct Investing, on considering your time horizon

"Here's my rookie mistake. I forgot to think about my investment time horizon. I had been saving the down payment for a condo purchase that was planned within a year. When my investments went up in value, I held on to the position instead of locking in profits to have cash on hand when I needed it. Unfortunately, the stock market can be volatile and unpredictable. I ended up selling my investments at a loss. Today, I consider when I might need the funds before investing. If it's longer term, I can handle the ups and downs of the market. But if it's for something I need soon, I choose less risky investments to help ensure I will have cash available when I need it."

DR. ENOCH OMOLOLU

Founder, SavvyNewCanadians.com, on day trading

"At the start of my investing journey, I took a few courses on day trading that promised to teach quick and 'guaranteed' ways to grow my portfolio. With a poor understanding of the dynamic between risk and return, I became obsessed with finding ways to beat the market. I day-traded foreign exchange, commodity futures and other derivatives. After doing this for a few years and losing significant money, I learned some crucial lessons about aligning my investment goals, risk tolerance and financial goals. These days, my portfolio is mostly passively managed using diversified asset allocation ETFs. I don't try to time the market."

MARK SEED

Founder, MyOwnAdvisor.ca, on planning for the unexpected

"My rookie mistake: thinking I never needed any emergency fund or rainy-day money. Unfortunately, life happens. In my early investing years (my 20s), the older car I was driving needed some significant repairs. Those expenses were put on a line of credit. While I paid it off fairly quickly, it would have been easier to have the cash ready and available to deal with that mess. Everyone can consider keeping an emergency fund of some sort, because bad timing and things can happen to great people."

MICHELLE HUNG

Author of The Sassy Investor, on finding her comfort zone

"My first investing mistake was buying a penny stock (a company that trades at less than $2.00/share) without any real understanding of either the company or the factors that make penny stocks volatile. After reading my first investing book, in which the author advised against owning this type of investment because they typically do not have a very long record of stability. I realized penny stocks were outside my comfort zone and stopped investing in them."

Once all six statues are placed, the central fountain will flow with knowledge...er, water, and the game is complete.

HOW TO PLAY

15.31%

Source: TD Asset Management Inc. As of June 30, 2023

The 10-year return on the S&P 500 Index (June 2013 to June 2023) suggesting there's power in staying invested. Based in Canadian Dollars.

15.31%

$1,737

Source: Canada.ca

$40,782

Source: Canada Revenue Agency

$40,782

VALUE

INVESTING STRATEGY 1 of 3

GROWTH

INVESTING STRATEGY 2 of 3

HOW TO PLAY

MOMENTUM

INVESTING STRATEGY 3 of 3

This stock buying strategy focuses on companies that are expected to grow at an above-average rate compared to their industry or the market overall. Growth investors believe that, since there's the chance of higher valuations, the increased risk associated with these companies is worth it. Learn more here.

This strategy can involve buying stocks that are trending higher and selling the positions once the price appears to have peaked. People who like this investment style believe it aligns trading activity with broader trends in the market. Learn more here.

This investing strategy focuses on companies and assets that appear to be undervalued by the market. Value investors believe in paying low prices for investments relative to their fundamental value. Learn more here.

15.31%

Source: TD Asset Management Inc. As of June 30, 2023

The 10-year return on the S&P 500 Index (June 2013 to June 2023) suggesting there's power in staying invested. Based in Canadian Dollars.

Source: Canada.ca

VALUE

MOMENTUM

INVESTING STRATEGY 1 of 3

Great job! You successfully uncovered the clues to improve your investing IQ

An experienced investor can point you towards the advantages of learning from another person's mistakes.

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Tap the professors throughout the campus to learn their rookie investing mistakes.

Find six other clues to help you level up your investing IQ. Each clue will add a golden statue to the campus common.

HOW TO PLAY

Once all six statues are placed, the central fountain will flow with knowledge...er, water, and the game is complete.

HOW TO PLAY

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Check out these learning resources

Is 2024 the year to level up your investment know-how? TD Direct Investing has educational webinars to help on your journey.

MARK SEED

MICHELLE HUNG

DR. ENOCH OMOLOLU

MEAGAN HENRIQUES

NICOLE EWING

DAVID SYKES

DENICE LIN

NUGWA HARUNA

Bruce Sellery

Average unused TFSA contribution room Canadians had as of 2022. The contribution limit for 2023 is $6,500. Unused contribution room rolls forward. Learn more here.

MOMENTUM

INVESTING STRATEGY 3 of 3

Bruce Sellery

NUGWA HARUNA

DENICE LIN

DAVID SYKES

NICOLE EWING

MEAGAN HENRIQUES

DR. ENOCH OMOLOLU

MARK SEED

MICHELLE HUNG

Source: Canada Revenue Agency

Average unused TFSA contribution room Canadians had as of 2022. The contribution limit for 2023 is $6,500. Unused contribution room rolls forward. Learn more here.

$40,782

INVESTING STRATEGY 3 of 3

GROWTH

INVESTING STRATEGY 2 of 3

Is 2024 the year to level up your investment know-how? TD Direct Investing has educational webinars to help on your journey.

$1,737